(Credit: George Iordanov-Nalbantov)

The bank’s latest Business Barometer shows that this mirrors a UK-wide trend, with confidence falling three points to 44%.

Scottish companies also reported lower confidence in their own business prospects month-on-month, down two points at 45%. When taken alongside their optimism in the economy, down six points to 43%, this gives a headline confidence reading of 44% (vs 48% in September).

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (43%), entering new markets (36%) and evolving their offering, for example by introducing new products or services (35%).

A net balance of 49% of businesses in Scotland also expect to increase staff levels over the next year, up 23 points on last month.

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

Sector Insights

Firms’ trading prospects pulled back for the third consecutive month in manufacturing to 46%, the lowest level since March. There were also moderate declines of 3 points in both retail and services to 51% and 57% respectively.

Expectations in construction bucked the trend, rising to 50%.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “This month’s fall in confidence reflects the wider UK trend.

“Scottish firms will still have their eyes on growth, and it’s encouraging to see businesses setting out clear plans to capitalise on new opportunities – from investing in their people to tapping into new markets. We’ll continue to be by Scottish business’ sides to help them on each step of their journey.”

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Although overall business confidence dipped in October, it follows a sustained period of significant optimism, and business sentiment remains above historical levels.

“Encouragingly, many businesses remain confident in their own trading prospects, and the increase in hiring intentions suggests more employers will want to grow their workforce.

“Businesses’ broader economic outlook continues to reflect this rounded picture, and as they move into the final part of the year, they will look to manage these considerations effectively.”

Paul Kempster, managing director for relationship management, Lloyds Business & Commercial, said: “While our latest Business Barometer shows a slight dip in confidence, we continue to see resilience and adaptability among UK businesses.

“At Lloyds, we remain committed to supporting our customers to help businesses continue to capitalise on growth opportunities as we move towards the final quarter of this year.”