Firms setting out ‘plans for growth’ despite fall in confidence, survey shows

Scottish firms are setting out “plans for growth” despite a fall in business confidence in June, a survey has found.

The latest Bank of Scotland Business Barometer report found business confidence in Scotland fell by five points to 47% in June.

The monthly survey of 1,200 UK businesses also showed firms’ optimism in their own trading prospects fell 10 points to 47%, while their optimism in the wider economy remained steady at 48%.

Despite this, the survey found that 55% of Scottish businesses expect to increase their staffing levels over the next year – an increase of 25 points on the previous month.

Over the next six months, the survey found Scottish businesses were looking to achieve growth by “evolving their offering” – for example by introducing new products or services (53%), investing in staff such as through training (48%), and entering new markets (41%).

Martyn Kendrick, Scotland director at Bank of Scotland commercial banking, said: “Despite lower overall confidence, Scottish businesses are still setting out plans for growth – whether that’s through plans to hire, or steps like launching new products and services.

“We remain ready to support every step of their journeys.”

Confidence among Scottish businesses was below those across the UK as a whole, which saw continued “positive momentum” by rising by one point to 51% in June.

Across the UK firms’ optimism about their own trading prospects and their confidence in the economy also both grew by one point, to 57% and 45% respectively.

Broken down by sector, business in the manufacturing and retail sectors saw significant gains in June, with 12-point rises in both sectors to 52%, an 11-month high for manufacturing.

However, construction and services both saw decreases in confidence, with falls by five points and four points respectively.

Commenting on the UK figures, Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Business confidence has continued its positive momentum, following the significant gains we saw in May.

“In particular, the sustained rise in hiring intentions suggests that while firms do still face challenges, they may be starting to look beyond short-term staffing needs and preparing for future growth.”

Paul Kempster, managing director for commercial banking coverage at Lloyds Business & Commercial said: “June’s figures for UK businesses show a sustained picture of growth and opportunity.

“Overall, while there have been some fluctuations, it’s encouraging to see all regions and nations well above the long-term average.

“As business confidence continues, we are committed to supporting businesses with a range of financial services to help them achieve their growth ambitions.”