Companies in Scotland reported higher confidence in their business prospects month-on-month at -30%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -35%.

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

When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during August. A total of 65% experienced a fall in demand for their products and services, up one point on the month before. Meanwhile, 10% experienced an increase in demand, up one point from July.

More than a third (35%) of Scottish firms surveyed said they weren’t currently using the Job Retention Scheme.

Of the 57% of businesses reporting disruption to their supply chain during August, 27% expected the situation to improve within three months, while 7% expected it would take more than 12 months to return to normal levels.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “August marks the second consecutive month where we’ve seen a slight improvement in overall business confidence. However, Scottish firms remain more pessimistic than their counterparts across the English regions and Wales – largely a reflection of the fact that Scotland is behind the rest of the UK in its emergence from lockdown.

“That said, the introduction of the Eat Out To Help Out scheme alongside VAT cuts this month will have provided a boost to those in the hospitality and leisure sectors. As we edge closer to Phase 4 of lockdown, the trading prospects of all Scottish businesses should improve.”

Overall UK confidence rose eight points during August to -14%. The South East became the first region to register a positive reading since March, after confidence climbed from -31% in July to 1% this month. After Scotland, the South West of England was the least confident in August at -25%.

All four major industry sectors reported confidence at the highest levels since March. Manufacturing saw the sharpest increase of 14 percentage points to -7%, while construction rose 11 percentage points to -11%. The retail sector rose to -8% and services increased to -18%.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, added: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain. Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base, which will hopefully continue over the coming months.”