While confidence levels across the UK were ranked at 32%, in Scotland the figure has fallen from 35% to 12% in March, according to the latest Bank of Scotland Business Barometer.
That compares to a 55% in London, 42% in the West Midlands and 39% in the North West - although Scotland fared better than the South East and Wales, both of which had confidence levels of 13%.
Economic optimism remains positive, the research found, but in March there was a net balance of 5% of Scottish firms saying they are feeling more positive about the future than they were three months ago.
And a balance 18% of businesses are expecting activity to increase, according to the research.
Jane Clark-Hutchison, regional director for mid markets at Bank of Scotland, said: “Scottish businesses are feeling the effects of uncertainty, which is why we have seen a fall in economic confidence at the end of the quarter. However, this still remains in positive territory.
“As a result, we are still seeing businesses looking to hire and planning for growth with a sense of cautious optimism, which is encouraging considering the unsettled landscape.”
A Scottish Government spokesman said: “We are absolutely committed to supporting business and growing Scotland’s already strong economy.
“Our investment per head on economic development dwarfs that of the UK Government and we are delivering a record £2.4 billion investment in enterprise and skills, a £4 billion commitment to infrastructure and £600 million to broadband.
“Brexit is a key source of uncertainty and the biggest threat facing the Scottish economy. It is vital that the UK Government commits to remaining in the EU single market and customs union to protect jobs and investment in Scotland. “