Business confidence in Scotland rose 12 points during May to 52%, according to the latest Business Barometer from Bank of Scotland.

While companies in Scotland reported lower confidence in their own business prospects month-on-month, down four points at 57%, firms’ optimism in the economy rose 29 points to 48%, which, taken together, gives a headline confidence reading of 52%, up from 40% in April.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as evolving their offerings, for example by introducing new products or services (56%), investing in their team through training (48%) and introducing new technology, with new tech like AI and automation (36%).

“Scottish business confidence has not only continued to rise, but has now remained above the UK national average for a sixth months in a row,” said Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking.

“Our country’s businesses are setting out clear plans for growth, with more firms planning to take steps such as launching new products and services than anywhere else in the UK. 

“This reflects a business community that has innovation and ambition in its DNA.” 

Across the UK, business confidence increased 11 points in May to 50% – its highest level since August 2024. Firms’ optimism in their own trading prospects strengthened six points to 56%, while their confidence in the wider economy also climbed 16 points to 44%.

The East Midlands was the most confident UK nation or region in May (66%), followed closely by the North East of England (65%).

According to economists at Lloyds, this rise in confidence has been driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid more promising prospects for potential global trade agreements. 

Drilling down into the data, construction firms gained a boost with confidence rising to a nine-month high of 56%, while those in the service sector reported a one-year high of 54%, and manufacturing confidence also rose by two points to 40%. 

However, retail confidence fell by five points to 40%, the lowest level since January this year.

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“The rebound in business confidence suggests that firms might be in a stronger position for the next quarter,” said Hann-Ju Ho, senior economist at Lloyds Commercial Banking.

“The positive trends in these metrics are important signals for potential growth and resilience in the business community and the wider economy. 

“While we know that fluctuations do occur month on month and the global economic outlook remains uncertain, this month’s increase in confidence is an encouraging sign.” 

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