The Bank of Scotland’s Business Barometer surveys 1,200 businesses monthly, providing signals about UK economic trends both regionally and nationwide.

This month, Scots companies reported lower confidence in their business prospects at 39%, which is down 14 points from August. When combined with their optimism in the economy, which is up 10 points to 29%, this gives a headline confidence reading of 33%.

This is comparatively lower than the rate currently seen at a national level: overall UK business confidence fell five points from 41% to 36% in September. Firms’ outlook on their trading prospects remained at 41% despite a drop of five points last month, while their optimism in the UK economy dropped by seven points to 30%.

Companies in London reported the highest levels of business confidence in September — and for the second consecutive month — at 44%, while Yorkshire-based firms reported the second highest reading at 40%, followed by businesses in the North West at 38%.

Commenting on the September numbers, Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “While the gains in business confidence we saw in August have not been maintained, it’s important to see the wider trend clearly reflected in the data which paints a very different picture to this time 12 months ago, when the economy was in significant difficulties.

“Although the economic environment remains uncertain with inflation and interest rate pressures playing their part, the recent decision by the Bank of England to leave interest rates unchanged is likely to help businesses feel more upbeat about the future, which may underpin confidence in the last three months of the year.”

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Chris Lawrie, regional director for Scotland at Bank of Scotland Commercial Banking, also commented, saying: “Despite a small dip this month business confidence in Scotland remains positive, with many firms seeking opportunities to grow by expanding their teams and investing in new markets.”

The Scottish businesses taking part in the Barometer identified their top target areas for growth in the next six months as: evolving their offer (40%), entering new markets (39%), and investing in their team (30%).

Further, a net balance of 31% of businesses in Scotland expect to increase staff levels through recruitment over the next year, up seven points on last month.