Fraser Sime

Companies in the region report lower confidence in their business prospects, which fell two points to -4%. When taken alongside their views of the economy, this gives an overall confidence of -6%.

Despite this, businesses’ hiring intentions show that a net balance of 7% of businesses in Scotland expect to hire more staff during the next year, up three points on last month.

Across the UK, overall confidence rose three points to 9% as firms’ optimism about the economy rose 10 points to 7%, although their confidence in their own prospects dropped three points to 12%.

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

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Unpredictability is a factor we’re all facing as we navigate through the current political climate. Whatever 2020 holds, we remain by the side of business to support firms build confidence and reach their full growth potential.

“This year, we pledged to lend £1.6 billion to Scottish businesses to help them capitalise on the opportunities they face and we will continue to work with them next year, when we hope to see greater clarity and higher levels of confidence returning across the country.”

Across Scotland, a net balance of 29% 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, up five points on a month ago.

Businesses in the West Midlands once again showed the most confidence, at 24%, ahead of London at 20%, and East Midlands at 14%.

Those in Scotland were the least confident, with an overall confidence of -6%, 15 points below the national average.

Overall business confidence improved in manufacturing, retail and services and stayed broadly steady in construction. The largest increase was in the retail sector, rising six points to 21%, while the construction sector remained high at 16% despite a slight decline of two points.

Sentiment in the manufacturing sector rose to a four-month high of 10%, while services confidence also increased for a second month, by four points to 4%.

Paul Gordon, managing director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “Overall, the national outlook continues to pick up with London seeing a step change from last month as business sentiment rose in the capital. It is also reassuring that overall confidence improved again in three out of the four sectors.

“While the services sector’s confidence remains low, it’s important to note it did increase for a second month and hopefully those businesses may consider some investment for growth. Businesses will hope the political and economic environment supports a further increase in confidence as we move towards the end of the year.”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The third consecutive increase in overall business confidence is positive for the UK as economic optimism reaches the highest level since January.

“While concerns about the impact of the UK leaving the EU continued to ease slightly, hiring intentions remain broadly stable and it will be interesting to see how this trend continues towards the end of 2019 and into the start of next year.”