Business confidence in Scotland rose one point during April to 42%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 14 points at 44%. When taken alongside their optimism in the economy, up 17 points to 40%, this gives a headline confidence reading of 42% (vs. 41% in March).

Scottish businesses identified their top target areas for growth in the next six months as investing in their team, including hiring new people and investing in training (36%), investing in sustainability (34%), and evolving their offering with new products or services (31%).

A net balance of 42% of businesses in the region also expect to increase staff levels over the next year, up one point on last month.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall UK business confidence held steady at 42% in April, the same level as recorded in March and February.

While firms’ confidence in their own prospects dipped marginally by four points to 45%, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33%.

The East of England was the most confident UK nation or region in April (56%), followed by Wales (51%) and the North East (46%).

Sector insights

Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45% (up 4 points) which is the highest level for three months. Similarly, confidence among firms in the services sector (42%) and construction (41%) also improved, largely driven by greater economic optimism.

In retail, confidence pulled back slightly from last month’s strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors other sectors do not face into, such as the poor weather.

Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Scottish businesses are still facing high costs, but such an encouraging rise in economic optimism suggests the pressure on their bottom lines is starting to ease as inflation comes down.

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“Looking ahead, events like Taylor Swift’s Eras tour, the Edinburgh Festival, and the 152nd Open golf championships are expected to drive a significant influx of tourists to Scotland over the summer so there’s lots for businesses to be excited about. From pubs and restaurants to local attractions, it’s expected to be a busy summer. However, if firms are going to make the most of this opportunity for growth, they need to have robust working capital and the appropriate resources in place.

“As always, we’ll continue to be by the side of Scottish businesses and are ready to help firms make the most of the busy summer trading period ahead.”