31 Jul 2018
Bank of Scotland’s Business Barometer for July 2018 shows:
Scottish businesses’ confidence in their own prospects edged higher during July to 31 per cent, two points higher than a month ago, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
But their optimism about the UK economy overall fell 16 points to two per cent, which impacted overall confidence, which fell seven points to 17 per cent compared with June.
Companies’ hiring intentions showed a net balance of 13 per cent of Scottish businesses expecting to hire more staff during the next year, down three points on last month.
Across the UK, overall confidence edged ahead to 30 per cent, up one point on June, as firms’ optimism about the economy rose two points to 25 per cent. Businesses’ confidence in their own business prospects was steady at 34 per cent.
The Business Barometer questions 1,200 businesses every month and provides early signals about UK economic trends both regionally and nationwide.
Jane Clark-Hutchison, Head of Mid Markets, Scotland, said: “Despite overall confidence falling, it’s encouraging to see the confidence in businesses’ own prospects edging higher across Scotland.
“Although optimism about the UK economy is down, it’s great to see Scottish companies remain upbeat about their own trading prospects.
“The figures are in keeping with the average of all regions outside London and reflect how resilient businesses are throughout Scotland; despite expecting the wider economic picture to deteriorate, firms back themselves to succeed.
“To help them achieve that during times of change, it’s increasingly important that firms manage their cash flow and working capital carefully to ensure they have the financial flexibility to respond to any threats or opportunities around the corner.
“We will continue to support and advise where possible to help them do this, as well as supporting firms keen to invest so that they can grow confidently throughout 2018 and beyond.”
A net balance of 18 per cent of Scottish businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, up two points on a month ago.
Businesses in the West Midlands showed the most confidence, at 49 per cent, ahead of London (47 per cent) and the North West (38 per cent). Businesses in the East of England were the least confident, with an overall confidence of 14 per cent, followed by Wales and Scotland at 17 per cent.
Overall confidence was the strongest in the construction sector (48 per cent), followed by manufacturing (38 per cent) and transport and communication (28 per cent).
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The fact that economic optimism rose across the UK as a whole this month illustrates a slightly more positive view on the balance of risks for the country’s economy, despite the expected interest rate rise this year.
“It will be interesting to see if the overall business confidence measure shifts from its steady position towards the end of the year.”