The ICAEW Business Confidence Monitor (BCM) for Scotland, published today found optimism had improved markedly at 29.4 on the quarterly index, its highest point since 2014.

The sharp rise in confidence was likely underpinned by the vaccine rollout and expectations of a strong rebound in economic growth as lockdown restrictions ease. 

However, the boost in confidence comes following a tough 12 months for Scottish businesses, who had experienced a fall in domestic sales and little export growth in the year to Q2 2021. 

The BCM found that domestic sales were expected to grow at their fastest rate since the survey began in 2004, while the rate of export growth was anticipated to outpace the rest of the UK over the coming year.

As sales pick up, Scottish businesses expect to begin hiring again after reducing their headcounts by 0.7% last year, with the furlough scheme likely to have protected jobs. Profits were predicted to grow in line with sales, which could in turn push companies to increase their investment spending. 

Against a backdrop of considerable uncertainty from the pandemic, businesses cited regulatory requirements as the main growing challenge, likely reflecting both Brexit difficulties and COVID-19 related restrictions.

Meanwhile, 27% of Scottish businesses reported that transport problems were a rising difficulty, likely because of the impact of the pandemic.

David Bond, ICAEW regional director for Scotland, said: “It’s positive news for Scotland’s economic recovery that business confidence has hit its highest point since 2014 as companies look to the future following the success of the UK’s vaccine rollout.

“The past year has been very challenging for Scottish companies, but with expected increases in domestic sales, exports and profits over the next 12 months, the prospects are promising.

“However, even as the economy unlocks companies will be mindful of global health and economic problems which could still see muted recovery for UK businesses, so it’s vital that the new Scottish Government works closely with businesses to plan a path to a sustainable economic recovery and vibrant future.”