Companies in Scotland are optimistic about their future prospects and intend to create jobs despite economic worries increasing in recent months, according to a study published today.
Bank of Scotland’s Business Barometer for October found that overall confidence for businesses north of the Border fell by three points to 4 per cent. This compares with a UK average of 19 per cent.
The survey reported that a net balance of 9 per cent of Scottish companies said they are pessimistic about the economy, a significant change from September, when a balance of 1 per cent said they felt optimistic.
Despite this, Scottish firms displayed “resilience” concerning the outlook for their own businesses. Confidence in their own prospects reached 18 per cent, up five points from the previous month, while a net balance of 13 per cent said they expect to hire more staff in the coming year, rising seven points from September.
The survey reported that overall confidence across the UK also dropped, sliding ten points to 19 per cent, its sharpest fall and lowest level all year. British firms’ optimism about the economy also slumped 18 points to just eight per cent.
UK companies’ confidence in their own business prospects fell three points, but remained higher than levels in Scotland, at 29 per cent.
Brexit was cited as a key factor in negative sentiment, as a net balance of 28 per cent of Scottish businesses felt the UK’s departure from the European Union was having a negative impact on their expectations of business activity, a jump of 22 points compared with a month ago.
Fraser Sime, director of small and medium-sized enterprise banking at Bank of Scotland, said: “Ongoing uncertainty appears to be weighing heavily on businesses’ optimism for the economy across the UK.
“However, it’s slightly more encouraging to see firms reporting growing confidence in their own business prospects and an increase in hiring intentions.
“This suggests a resilience that may prove to be valuable as companies await greater clarity on the UK’s future trading relationship.”
Businesses in London showed the most confidence, at 37 per cent, said the survey, while those in the south-west of England were at the lower end of the scale, with overall confidence at just two per cent.
Overall confidence in the construction sector fell 19 points to 22 per cent, and the manufacturing industry saw a fall of ten points to 21 per cent.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Business confidence is continuing to fall as firms become less optimistic about the wider economy, and is impacted by the mixed rhetoric on the progress being made in the ongoing EU-UK negotiations.”
The survey questions 1,200 businesses monthly, including 104 firms in Scotland. It aims to provide early signals about UK economic trends at a regional and national level.