Scottish firms report falling confidence in September

● Dip marks sharp contrast to growth by UK as a whole ● However, strong hiring aims show their ‘resilience’

Businesses in Scotland saw their overall confidence dip during September, in contrast to the growth in optimism seen by the rest of the UK, according to a study published today.

Bank of Scotland’s Business Barometer for September found that overall confidence for firms north of the Border fell ten points in the past month to 7 per cent.

Economic optimism stood at 1 per cent, eight points below August, and firms’ confidence in their own business prospects was 13 per cent, just over half of the 25 per cent in August.

However, hiring intentions held steady, with a net balance of 6 per cent expecting to hire more staff in the next year.

The figures compare to those for the UK as a whole, with overall confidence up six points to 29 per cent – more than four times the Scottish level – as firms’ optimism about the economy rebounded after August’s dip, rising nine points to 26 per cent. Businesses’ confidence in their own business prospects grew three points to 32 per cent, according the study, which was carried out between 3 and 16 September.

Hann-ju Ho, senior economist for Bank of Scotland, said: “Overall confidence has dipped, but it’s encouraging to see hiring intentions remaining steady. This reinforces our experience of seeing the resilience of Scottish businesses shine through, even during uncertain times.”

The survey, covering about 1,200 companies including 101 north of the Border, found that across Scotland a net balance of 6 per cent of businesses said they felt Brexit was hampering their expectations for business activity, down 13 points on a month ago.

Ho added: “With questions surrounding the economic and political future of the UK, it’s not wholly unsurprising to see lower confidence in businesses.

“We will continue to support firms into Q4 as we hope to see increasing stability as the year ends have a positive impact on the confidence on firms across the country.”

Firms in the construction sector were the most confident in September, up five points to 41 per cent, followed by consumer services at 33 per cent. Manufacturers, however, saw confidence fall – the only broad sector to do so – by seven points to 31 per cent.

Ho continued: “Across the UK, August’s dip in economic confidence and overall business confidence, appears to have been just that – a dip – and has been reversed in September.

“A brighter outlook, while potentially linked to what many firms saw as increasing signs of progress in Brexit negotiations earlier in the month, illustrates a more positive view on the balance of risks facing businesses as they enter the fourth quarter of the year.”