Scottish business confidence rises but fails to lift investment plans | Glasgow Chamber of Commerce
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Scottish business confidence rises but fails to lift investment plans

Business confidence in Scotland rose three points to 20 per cent in the first six months of the year, according to the latest Business in Britain report from Bank of Scotland. 

In line with the increase in confidence – calculated as an average of respondents’ expected sales, orders and profits over the next six months – firms are increasing their investment and recruitment plans. 

The net balance of firms looking to grow investment in the next six months rose by 11 points to 13 per cent, compared with January. 

Although the net balance of businesses looking to hire more staff rose by nine points to two per cent since the start of the year, the share of firms that reported difficulties hiring skilled labour also rose two points to 45 per cent. 

Perhaps in response to this, the number expecting to increase pay rose by six points to 21 per cent. 

The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative. 

Mixed picture across the UK  

Across the UK, business confidence was highest in London (31 per cent), followed by the South East (30 per cent) while the lowest level of confidence was in the East Midlands (14 per cent) and the North West (19 per cent). 

Confidence Index

 

 

 

Region

Jul 2018

Jan 2018

Change (Jan – July)

London

31 per cent

25 per cent

+6pts

South East

30 per cent

24 per cent

+6pts

South West

29 per cent

19 per cent

+10pts

West Midlands

29 per cent

28 per cent

+1pts

North East

25 per cent

38 per cent

-13pts

East of England

25 per cent

18 per cent

+7pts

Wales

23 per cent

20 per cent

+3pts

Yorkshire & Humber

23 per cent

15 per cent

+8pts

Scotland

20 per cent

17 per cent

+3pts

North West

19 per cent

31 per cent

-12pts

East Midlands

14 per cent

24 per cent

-10pts

Fraser Sime, Regional Director for Scotland at Bank of Scotland said: “Businesses in Scotland have shown great resilience and have continued to adapt to these turbulent times. 

“Despite firms starting to feel more confident as the landscape shows signs of levelling out, Brexit uncertainty is still at the forefront of minds across Scotland. 

“We are however seeing businesses begin to take cautious steps towards growth, with plans to increase investment and recruit more staff. 

“Now we need to continue to support those businesses to ensure they seize every opportunity being created by the current climate in order to grow and achieve success.” 

Risks ahead 

Brexit uncertainty is now the single greatest risk to firms in Scotland in the next six months, cited by 29 per cent of firms across the country. 

The proportion of Scottish firms reporting weaker UK demand as their greatest risk fell five points to 13 per cent, while those citing weaker global demand rose nine points to 13 per cent.  

Uncertainty around Brexit negotiations continue  

Just under a half (45%) of firms in Scotland expect a negative impact on their business if no trade agreement is reached with the EU. A tenth (10%) expect a positive impact, while 45 per cent either do not expect any impact or said they didn’t know. 

Confidence begins to grow in sectors that rely on domestic demand 

Nationally, business confidence was highest in the transport & communication and construction sectors, with the construction sector in particular registering a significant rise compared with January’s survey, rising 12 points to 26 per cent. 

Confidence was lowest in retail & wholesale, and in hospitality & leisure, both of which saw confidence fall since January.

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