Scottish business confidence hits Covid-period high as engineering turns positive

Business confidence in Scotland has climbed to its highest level since the onset of the coronavirus crisis, according to Bank of Scotland.

The lender’s latest Business Barometer shows confidence rising six points during May, to a net balance of 15 per cent, the strongest reading since February 2020.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up five points at 10 per cent. When taken alongside their optimism in the economy in general, up six points to 19 per cent, this gives the headline confidence reading of 15 per cent.

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The upbeat findings come as Scottish Engineering’s latest quarterly report – also released today – shows its key metrics moving from negative to positive territory for the first time since the pandemic struck.

The Bank of Scotland barometer looked at Scotland while a wider survey by parent group Lloyds examined the UK as a whole. Picture: Jeff J Mitchell/Getty Images

Fraser Sime, regional director at Bank of Scotland commercial banking, said: “With lockdown restrictions easing further in May, Scotland’s hospitality and tourism sectors were able to join non-essential retail in reopening their doors, a move which has helped to boost confidence across the country.

“Encouragingly, for the first time this year, businesses are looking to hire staff. This is a clear indicator that we are moving in the right direction with firms more optimistic about the coming months.

“We’ll continue to stand by Scottish businesses as they work towards what we all hope will be a busy summer.”

The barometer takes soundings from 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 8 per cent of businesses in Scotland expect to increase staff levels over the next year, marking the first net-positive reading in 15 months.

Overall UK business confidence rose four points in May to 33 per cent – a fourth consecutive month of growth. The reading comes after non-essential retail and hospitality firms reopened their doors to customers.

Hann-Ju Ho, senior economist, Lloyds Bank commercial banking, said: “A fourth consecutive monthly increase in business confidence, and the highest in three years, leaves us hopeful for the UK’s economic recovery.

“The increase in confidence was buoyed by a further easing of lockdown restrictions and a rise in optimism about the wider economy. While we need to wait and see how the months ahead will unfold, the recent rise in positive outlook is an encouraging sign that firms are emerging from the Covid-19 crisis with renewed resilience and vigour.”

In its report, Scottish Engineering noted that while concern remains for those sectors whose recovery is still “some way off”, the speed and magnitude of improvement was much stronger than expected at the start of 2021.

Chief executive Paul Sheerin said: “As a self-confessed optimist, even I have to admit that I struggled earlier this year as new variant viruses and return to lockdown threatened to replace a hopeful outlook with dwindling optimism.

“In that regard, the results of our survey are more than appreciated in the scale and pace of improvement. Challenges remain, and these are global in nature related to demand on one hand and the economic balance of supply on the other.”

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