SCOTTISH BUSINESS CONFIDENCE DIPS

Bank of Scotland’s Business Barometer for July 2019 shows:

  • Overall confidence for firms in Scotland fell 17 points in the past month to zero per cent
  • Firms’ confidence in their own business prospects was six per cent, compared with 32 per cent in June

Business confidence in Scotland fell 17 points during July to zero per cent, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their business prospects, which fell 26 points to six per cent. When taken together with their views on the economy overall, this gave an overall confidence of zero per cent.

Across the UK, overall confidence was steady in July at 13 per cent, in line with the average this year, but below the long term average of 24 per cent. Trading prospects for the year ahead fell by 3 points to 19 per cent, but economic optimism rose 1 point to 6 per cent. Employment expectations rose by 1 point to 12 per cent, when looking at the UK as a whole. 

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Fraser Sime, regional director at Bank of Scotland Commercial Banking, said: “Current political and economic uncertainties are clearly at the forefront of Scottish businesses’ minds.

“Whatever lies ahead for businesses, we are by their side to support their growth ambitions.

“We’ve pledged to lend up to £1.6 billion to support Scottish firms this year, which we hope will allow them to hire more people, set their sights on expansion, and ultimately succeed.”

Across Scotland, a net balance of 25 per cent of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down four points on a month ago.

Elsewhere in the UK

Businesses in the South West were the most confident, at 29 per cent, ahead of the East Midlands (26 per cent) and West Midlands (19 per cent).

Those in Scotland were the least confident, with an overall confidence of zero per cent, 13 points below the national average. Confidence also fell significantly in the North West, down 17 points to 3 per cent. Yorkshire & the Humber (up 1 point to 6 per cent) and the South East (down 10 points to 4 per cent) made up the bottom four.

Sector snapshot

Manufacturing was the most upbeat sector, with overall confidence rising nine points to 19 per cent and overtaking retail, which fell five points to 17 per cent. Overall confidence among services businesses was unchanged at 12 per cent, but construction dropped 11 points to six, the sector’s lowest reading in more than 18 months.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “The UK manufacturing sector may have been boosted by the truce in the trade war between China and the USA, which hopefully marks an upturn for this sector and could paint a more optimistic outlook for coming months but broader political uncertainty is expected to weigh on the outlook.

“The fact that business confidence has been boosted in the South West and East Midlands with confidence up 21 points and 18 points respectively could be a sign of an upturn, but we will need to wait and see what the coming months bring. It is certainly a continued indication of the UK’s business resilience.”

 

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It is promising to see national confidence levels continuing to beat the dip seen in February despite business confidence remaining below the long-term average and overall business confidence remaining unchanged this month.

“Coupled with this, employment expectations still remain largely unchanged from last month, with only one-third of firms planning to increase their staff levels, compared with more than 40 per cent of firms last year, suggesting cautious business behaviour in the current economic environment.”