Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 21 points at 66%. When taken alongside their optimism in the economy, up five points to 62%, this gives a headline confidence reading of 64% (vs. 51% in July) – the second-highest reading in the UK in August, behind the North East of England (65%).

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as introducing new technology (44%), entering new markets (42%) and investing in their team, for example through training (35%).

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

Overall UK business confidence in August remained unchanged from July at 50%.

Firms’ confidence in the overall economy increased two points to 47%, offsetting marginally weaker confidence in their own trading prospects, which fell two points month-on-month to 54% but remained above the long-term average.

Output expectations for the various sectors remained at or near their three-year highs. Construction had a steep increase to 58%, up by 14 points, whereas other sectors experienced slight declines. Trading prospects for manufacturing dropped by 2 points to 58%, at the same level as construction, while Retail and Services fell to 53% down 7 and 3 points respectively.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s great to see Scottish business confidence soaring, and particularly to see firms so optimistic when it comes to their own trading prospects.

“August is often a particularly busy period for our tourism and hospitality sectors, not least in the capital. In 2023, Edinburgh’s festivals drew 250,000 attendees to the city, leading to a 30% increase in hospitality sales compared to the rest of the year. This August, hotels have similarly seen strong demand, with an average occupancy rate of 79%, peaking at 86%.

“With international tourism going from strength to strength throughout Scotland, local SMEs must continue to make sure they’re able to capitalise on demand. We at the Bank of Scotland will be by their side every step of the way.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “As in July we’ve seen a particularly strong outcome for business confidence.

“It remains at an elevated level of 50%, which is well above the long-term average of 29% – and it has been above the average for the past 15 months. Official GDP data for the first half of this year was encouraging and the survey results indicate that solid economic performance will likely continue as we move into the second half of the year.

“On a more cautious note, we have seen wage growth expectations pick up this month, although not enough to negate the downward trend so far in 2024.

“Overall, the economy looks to be stable and from the positive results recorded, businesses are echoing this sentiment.”

Paul Gordon, managing director for relationship management, Lloyds Bank Commercial Banking, said: “With business confidence levels remaining at an eight year high, it is reassuring to know that UK firms are making strides in this space. It is great to see economic optimism rising steadily throughout the year and we hope to see this continue.

“Our priority is to provide ongoing support for all businesses regardless of their confidence or trading prospects, to ensure that we can continue to help Britain recover and prosper.”