New figures from Bank of Scotland’s Business Barometer show that Scottish business confidence surged to 51% in July, driven by increased optimism in both business prospects and the economy, with a strong focus on staff investment, innovation, and market expansion for future growth.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up one point to 45%. When taken alongside their optimism in the economy, which increased by 15 points to 57%, this gives a headline confidence reading of 51%, up from 43% in June.

This latest survey of 1,200 companies also shows that 47% of businesses in the country expect to increase staff levels over the next year, a four-point rise from last month.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team (54%), evolving their offering (41%), and entering new markets (33%).

Martyn Kendrick, Scotland director at Bank of Scotland commercial banking, said: “It’s fantastic to see Scottish business confidence rising again, and staying above the UK average for a second month in a row.”

Overall UK business confidence climbed nine points in July to 50% – the same as in May when confidence reached an eight-year high.

Businesses’ confidence in their own trading prospects rose 12 points to 56% – the highest reading since April 2017. Meanwhile, confidence in the economy climbed six points to 45%.

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There was an improvement across all sector categories this month, with the most notable gains in retail, which reached a post-pandemic high of 60%. There were also significant increases in manufacturing trading prospects, rising by 9 points to a two-year high. Services rose by 10 points to 56%, while construction saw a more modest increase of 2 points to 44%.

Hann-Ju Ho, senior economist with Lloyds Bank commercial banking, said: “This month shows that businesses are feeling more confident, buoyed by their positive trading prospects and economic outlook.

“Retail-focused businesses were the main driving force behind the positive rise in trading prospects and these results tally with the improvement we have seen in consumer confidence. With the data suggesting that businesses may have taken a more cautious approach in June, next month will be one to watch to see if the renewed sense of optimism continues.”