Scotland leads the UK in business confidence during February

A net balance of 26% of businesses in the country expected to increase staff levels over the next year, down 16 points on last month.

Overall, UK business confidence dipped two points in February to 42%, driven by softening confidence from firms in both their own trading prospects (49% vs 51% in January) and the wider economy (34% vs 37% in January).

However, companies’ hiring intentions increased to the highest level since May 2022, with 36% of firms intending to increase staff levels over the next 12 months;up three points on the month before.

There was a mixed picture for sectors this month. Confidence fell in manufacturing (nine points to 40%) and construction (seven points to 38%) respectively, although results remain higher than the same time last year.

In contrast, the dominant services sector was unchanged compared to January at 45%, exceeding all months of 2023 except for November. Retail confidence was broadly steady, dipping one point to 41%.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “Such high levels of confidence in the face of what are still challenging economic conditions is a testament to the Scottish business community’s resilience and ambition.

“The focus on innovation, together with widespread investment in people, is particularly encouraging.

“This will not only help futureproof firms’ specific offerings, but also strengthen the skills base that is the bedrock to our economy – helping firms make the most of new opportunities and weather any future downturns in trading.”

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added: “This month’s data still reflects a positive mood among businesses despite a marginal fall in overall confidence.

“The split across the regions also provides reason to view the dip in confidence at the broader UK level cautiously – six regions have reported an increase in confidence while the other six have reported a decrease.

“So, scratching the surface, we see a story that continues to show a more positive outlook for the year ahead.”

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