The bank’s latest Business Barometer shows that business confidence in Scotland rose 15 points to 41%, while business confidence across the UK rose three points to 42%. The research was conducted between 1-15 November, before the Autumn Statement.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up seven points at 51%. When taken alongside their optimism in the economy, up 22 points to 32%, this gives a headline confidence reading of 41%.

Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), investing in sustainability (30%), and introducing new technology (29%).

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

A net balance of 25% of businesses in Scotland expect to increase staff levels over the next year, down eight points on last month.

Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “After a dip in October, it’s good to see businesses feeling more confident in their prospects for the coming months. With the festive season almost here and Christmas markets in cities including Edinburgh and Aberdeen now in full swing, those in the hospitality and leisure industries will be preparing for an influx of trade.

“For many firms this means taking on more staff to manage the increase in demand. They also need to ensure their working capital is in healthy shape, so they are ready to capitalise on the opportunities ahead. We’ll be by the side of businesses to support them through the festive period and beyond.”

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added: “Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.

“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.

“Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”