The quarterly survey of senior executives working in the sector found that business confidence remains high, building on an optimistic outlook for the first quarter of 2024.

The survey found 43% of firms in Scotland are ‘quite confident’ of growth prospects during the next quarter (April to June), despite the same percentage saying they are ‘quite negative’ when it comes to the view of the UK economy in general.

Geopolitical risks and regulatory pressures were identified as the biggest challenges to face businesses, with the biggest areas firms were potentially looking to make savings during this time was via staff reduction or reduced hiring.

The survey also showed that, ahead of the General Election, important policies for Scottish firms included green economy ambitions.

Arleen Arnott, Edinburgh office senior partner and financial services partner, said: “Regardless of the political environment and the economy showing some signs of recovering, the coming months will continue to be challenging for firms of all sizes across Scotland.

“Not only does the sector need to remain resilient now, but it also needs to look longer-term and invest in ways to boost productivity through technology, effectively respond to regulatory demands and build sustainable business models.

“This will all be an essential driver of growth and will lay solid foundations for competitiveness as the economy rebounds.”

Karim Haji, global and UK head of financial services at KPMG, said: “The start of the year saw renewed growth for the economy and forward-looking indicators point to further signs of recovery, which may well be the reason for continued optimism among leaders in the sector across the country as a whole.

“However, while financial services leaders are keeping an optimistic outlook, they do so with caution as costs are still a concern, and the sector continues to eye up savings in response to economic pressures.”

Across the UK, 88% of firms are confident when it comes to overall business growth in Q2, with 45% of executives feeling ‘quite confident’, followed by 43% who are casting a ‘very confident’ outlook. Some 87% have a confident outlook on profitability for the quarter.