Confidence grows among Scots firms
Business confidence in Scotland enjoyed an “exciting” increase in momentum in January, with firms now encouraged to adapt to harness growth opportunities, according to a report published today.
The latest business barometer from Bank of Scotland has shown that optimism in the sector gained 11 points during the month to 42 per cent, up from 31 per cent the previous month. Companies identified their top target areas for growth in the next six months as investing in their team (41 per cent), evolving products and services (28 per cent), and introducing new technology (27 per cent), while a net balance of 42 per cent also expect to increase staff levels over the next year, up 12 points on December.
Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “After a dip in confidence at the end of 2023, it’s exciting to see Scottish businesses start the year with such a positive outlook. This follows a festive period with the likes of Edinburgh welcoming more than 50,000 people to its annual Hogmanay Street Party – attendance that’s back to pre-pandemic levels.
“While Scottish businesses have faced a lot of challenges over the past few years and continue to contend with a difficult geopolitical and economic landscape, we are still seeing a strong appetite for growth. To maximise these growth opportunities, companies need to prepare to adapt and adjust to external factors. For many, this could mean evolving their offering, diversifying into new markets, or investing in new ways of working.”
The Lloyds-owned lender also found that overall UK business confidence rose nine points in January to 44 per cent – its highest level since February 2022 and its strongest start to a year since 2016 – with a net 33 per cent of firms intending to increase staff levels over the next 12 months, up four points on the month before.
Hann-ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Businesses are feeling more confident following the cautious end to 2023, with this being the strongest start to a year since January 2016… Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase.”
However, such positive news on expanding workforces is at odds with the findings of a separate survey, also published today, from trade body the Federation of Small Businesses. It has warned that more small firms are looking to reduce rather than increase headcount for the first time since the height of the pandemic in 2020, with its latest small business index showing that one in seven such companies has reduced staff numbers in the last three months.