Business confidence in Scotland fell 15 points during March to 41%, 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 10 points at 58%. When taken alongside their optimism in the economy, which fell 23 points to 23%, it gives a headline confidence reading of 41% (vs. 56% in February).

However, a net balance of 41% of businesses in the country expect to increase staff levels over the next year, up 15 points on last month.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (42%), investing in their team, for example by hiring new staff or investing in training (37%) and introducing new technology, such as AI or automation (34%).

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

Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).

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Yorkshire and the Humber was the most confident UK nation or region in March (60%), followed by the North East (56%) and London (52%).

Sector Insights

Services confidence fell 5 points to 40%, the first decline since December. That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.

The gains in manufacturing (up 1 point to 41%) and construction (up 2 points to 40%) were relatively modest and confidence remained below levels seen at the start of 2024. Firms in the retail sector reported improved confidence (up 5 points to 45%), which was the strongest result for over two years.