Confidence among Scottish businesses dips
Bank of Scotland’s Business Barometer for May 2019 shows:
- Overall confidence of firms in Scotland fell nine points in the past month to zero per cent
- Firms’ confidence in their own business prospects is 17 per cent, compared with 19 per cent in April
In line with the trend seen across the UK, business confidence in Scotland fell nine points during May to zero per cent, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland report lower confidence in their business prospects at 17 per cent, two points lower than in April. When taken together with their views on the economy overall, this gives an overall confidence reading.
In Scotland, a net balance of 47 per cent of businesses say they feel that the UK’s exit from the European Union is having a negative impact on their expectations for business activity, up 27 points on a month ago. Across the UK, a net balance of 21 per cent of firms say it is having a negative impact.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Fraser Sime, regional director for Scotland at Bank of Scotland, said: “Confidence among businesses in Scotland has dipped this month but remains resilient as firms look to manage their way through the current environment.
“Consumer-facing businesses tell us that household spending is holding up well, and we are working by the side of firms to ensure they can take advantage of current opportunities, while preparing for a return to stronger growth when confidence begins rising again.
“To support the growth of businesses across Scotland, we’ve committed to lend them £1.6 billion this year.”
Across the UK, overall confidence slipped four points to 10 per cent as firms’ confidence in their own prospects fell six points to 17 per cent, while their economic optimism dropped two points to two per cent.
Businesses in Yorkshire and the Humber showed the most confidence, at 23 per cent, ahead of the West Midlands (21 per cent).
Those in the East of England are the least confident, with an overall confidence of minus six per cent, 16 points below the national average.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “Overall business confidence continues to sit below the long-term average. A slight dip in confidence this month appears largely to reflect companies’ assessment of their own trading prospects for the coming year, and the anticipated impact of the UK leaving the EU. It’s encouraging to note that while we are seeing uncertainty impacting business confidence overall, optimism regarding the wider economy remains broadly steady.”
Rise in manufacturing confidence
Confidence rose among manufacturing businesses for the second consecutive month, up 5 points to a four-month high of 21 per cent. The sector was the most confident in both trading prospects and economic optimism.
The services sector continued to report the weakest overall confidence (down 5 points to 7 per cent), reflecting firms’ more negative economic optimism and the expected impact of the UK leaving the EU. Confidence also fell in construction (down 3 points to 12 per cent) and retail (down 5 points to 11 per cent).
Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “Although there has been a fall in business confidence this month – in part due to the political climate at home and in arguably larger part due to the escalating US-China trade tensions – there continues to be improvements in confidence in some areas. The manufacturing sector and a number of the regions deliver stronger readings this month, suggesting the UK’s continued business resilience.”
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