Bank of Scotland’s Business Barometer for December 2019 shows:
- Overall confidence for Scottish firms rose 17 points in the past month to 11%
- Economic optimism in Scotland stood at 9%, 20 points above last month
- Firms’ confidence in their own business prospects was 12%, compared with -2% in November
Scottish business confidence bounced back in December, jumping 17 points to 11%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland report higher confidence in their business prospects at 12% and higher economic optimism at 9%. Together, this gives an overall confidence reading of 11%.
The results for December represent the end of a five-month downwards trend in Scottish business confidence. The last time Bank of Scotland’s Business Barometer results showed positive business confidence was in June, when it registered 17%.
Across the UK, overall confidence edged up one point to 10% as firms’ confidence in their own prospects rose six points to 18%, although their optimism in the economy fell to 2%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was carried out before the result of last week’s General Election was known.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “It’s encouraging to measure such a healthy rise in Scottish business confidence as we close off 2019.
“Confidence has fluctuated this year as economic and political uncertainty gripped Scotland and the rest of the UK, but we hope December’s positive Barometer results will continue into 2020.
“The year looks likely to be another one that’s characterised by some volatility – be that domestically or globally. Whatever the road ahead, we will continue to be by the side of Scotland’s businesses, helping them capitalise on opportunities and overcome obstacles.”
Across Scotland, a net balance of 27% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down two points on a month ago.
Elsewhere, businesses’ hiring intentions showed that a net balance of 3% of businesses in the region expect to hire more staff during the next year, down four points on last month.
UK overview
Businesses in the West Midlands had the highest confidence for the third month running, at 23%, ahead of the East Midlands at 18%, and London at 16%.
Those in East of England were the least confident, with an overall confidence of -2%, 12 points below the national average.
In December, overall business confidence saw a marked improvement in the manufacturing sector, increasing 17 points to 27%. Confidence in the retail sector increased by one point to 22%, while confidence in the service sector stayed broadly steady at 4%. The construction sector saw a slight decrease of four points to 16%.
Paul Gordon, managing director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “UK SMEs are carrying pent-up demand. The West Midlands has had a particularly strong end to the year in terms of confidence and it is encouraging to see both Scotland and Northern Ireland posting the biggest overall confidence rises as 2019 rounds out.
“As with any monthly measure, there is a degree of fluctuation to be expected but what we know from the conversations we have with businesses up and down the UK is that their ambition remains strong and they crave economic and political conditions that reduce uncertainty.
“As we move into 2020 we will continue support them to grow and trade at home and overseas.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “As we come to the end of what has undoubtedly been a turbulent year, it is encouraging to see sustained increases in overall business confidence and the sharp improvement in manufacturing confidence.
“There is now clarity over the UK’s departure from the EU, but the focus will turn to whether a new trade agreement can be negotiated during the transition period which currently runs until the end of next year.”