Scottish firms planning to invest and hire despite fall in confidence
According to the latest business barometer from Bank of Scotland Commercial Banking, confidence north of the Border fell nine points during May to a reading of 22 per cent. Companies in Scotland reported lower confidence in their own business prospects, month-on-month, down two points to 30 per cent. When taken alongside their optimism in the economy, down 20 points to 14 per cent, this gives the headline confidence measure of 22 per cent.
The barometer, which surveys some 1,200 businesses every month, provides early signals about UK economic trends both regionally and nationwide. Scottish firms identified their top target areas for growth in the next six months as evolving their offer, investing in their team and entering new markets.
A net balance of 29 per cent of businesses in Scotland expect to increase staff levels over the next year, down just three points on April. Overall UK business confidence dropped five points to 28 per cent this month. Despite the dip, every UK nation and region returned a positive confidence reading.
Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, part of Lloyds Banking Group, said: “Despite a slight drop, business confidence figures remain positive and it’s great to see so many firms planning to invest in their teams. On the ground we’re hearing that more and more companies are setting their sights on new goals in the coming 12 months. Whether going after new markets, or making new hires to help during busier periods, it’s important that businesses ensure their working capital is in rude health.”
As much of the country celebrated the Coronation, London reported the highest levels of business confidence at 43 per cent (down four points on the previous month), followed by the north-east of England at 35 per cent (down six points month-on-month). The West Midlands, south-east England and south-west England, also reported high readings in May, all at 30 per cent. Firms remain optimistic about their own trading prospects, with a net balance of 34 per cent expecting business activity to increase over the next 12 months, down just five points on last month.
Paul Gordon, managing director for relationship management, Lloyds Bank Business & Commercial Banking, said: “Although we’ve seen a slight slowdown in hiring activity this month, there is still an overall upward trend in hiring intentions this year, with improvements in labour availability as well. While businesses may be feeling less optimistic, it’s still encouraging to see confidence is still in line with the barometer’s long-term average, consistent with positive growth.”
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added: “As the economic environment remains challenging, compounded by stubborn inflation and higher wage pressures, business confidence has dipped slightly as firms feel cautious about the wider economy and their own trading prospects. However, while firms’ trading prospects and economic optimism both eased back, they still remain in positive territory.”
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