Scottish firms increasingly gloomy

Confidence across Scottish businesses is continuing to fall with optimism below that seen across the wider UK, according to a report by Bank of Scotland.

Fraser Sime of Bank of Scotland warns tough trading lies ahead for Scottish firms.
Fraser Sime of Bank of Scotland warns tough trading lies ahead for Scottish firms.

The bank’s latest business barometer report showed confidence levels among Scottish firms fell seven points during October to -28 per cent.

Although companies reported marginally higher confidence in their own business prospects, a downturn in optimism over the wider economy led to an overall fall. The report also showed an increasing number of firms expect to reduce staff levels over the next year.

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Across the UK as a whole, overall confidence dropped seven points month-on-month to -18 per cent.

Fraser Sime, regional director at Bank of Scotland Commercial Banking, warned tough trading conditions lie ahead for many.

“Covid-19 restrictions continue to change in response to the pandemic, contributing to an environment of uncertainty which brings with it demand-dampening effects. Unsurprisingly, this is having an impact on firms’ confidence.”

According to the report, the North West of England had the highest confidence in October at -2 per cent, followed by the East of England (-8 per cent), and North East (-10 per cent). Meanwhile, optimism fell 21 points in Yorkshire to -29 per cent, making it the least confident UK region.

Confidence among service sector firms slipped back as those in the hospitality and arts and leisure dealt with the implications of further measures to tackle the pandemic. Manufacturing and retail logged modest improvements, up three points to -15 per cent and up one point to -7 per cent respectively.

Paul Gordon, managing director for SMEs and mid-corporates for Lloyds Bank Commercial Banking, said: “The recent lockdown restrictions have understandably had a negative impact on the services sector, especially arts and leisure businesses that have often borne the brunt of evolving preventive measures.

“Having said that, we are fast approaching the festive season, which might bring a boost for the sector – although it remains to be seen how this will unfold in the midst of the pandemic.”

The survey is carried out among 1,200 companies with the overall figure weighing up the percentage of firms that are positive in outlook against those that are negative.

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