Scottish business confidence falls in June

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 16 points at 44%. When taken alongside their optimism in the economy, down 11 points to 42%, this gives a headline confidence reading of 43% (vs. 57% in May).

Looking ahead to the next six months, businesses in Scotland identified their top target areas for growth as investing in their team, for example through training (44%), introducing new technology (34%), and entering new markets (33%).

Overall UK business confidence fell nine points in June to a net balance of 41%. However, this was consistent with levels seen during Q1 2024, before the sharp rise in May, and remained above the long-term average (28%).

While businesses reported lower confidence in both their own trading prospects, down 10 points to 44%, and the economy, down seven points to 39%, both remained robust.

Results across the sectors were mixed in June as three of the four sectors saw a decline in trading prospects. Construction fell 16 points to 42% and there were other notable decreases in retail (down 14 points to 35%) and services (down 11 points to 46%). Manufacturing however, bucked this trend, increasing by two points to 51%.

Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Although Scottish confidence has dipped in June, it remains above the UK average for a second month in a row.

“July and August could bring new opportunities for Scottish businesses through global attractions like Edinburgh’s Fringe, the Cowal Gathering and the Open Championship at Royal Troon.

“This follows the wave of concertgoers that visited to the capital for Taylor Swift’s The Eras Tour at Murrayfield, which delivered up to £77 million to the local economy as fans flocked to cafes, bars, and tourist spots.”

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “These results suggest a slight drop in business confidence in June as firms’ trading outlook and economic optimism fell below levels seen in recent months. However, these results are still broadly in line with the positive readings we were seeing towards the start of the year.

“Fewer businesses indicated that their prices would increase in the next few months, which chimes with last week’s fall in inflation figures. Meanwhile, there was a mixed set of results seen across the sectors, but following last month’s increase, confidence fell in construction as well as retail and services.”