• Business confidence in Scotland rose 12 points to 52% in May

• While firms’ optimism in their own trading prospects fell four points to 57%, their optimism in the economy climbed 29 points to 48%
• Overall UK business confidence rose 11 points in May to 50% – the highest level in nine months

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%. Taken together, this gives a headline confidence reading of 52% (vs. 40% in April).

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 (56%), investing in their team, for example through training (48%) and introducing new technology, for example AI and automation (36%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

National Picture

Overall, 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%).

Sector insights

Construction firms’ confidence rose to a nine-month high of 56%, while those in the service sector reported a one-year high of 54%. 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.

Martyn Kendrick, Scotland Director at Bank of Scotland Commercial Banking, said: “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.

“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. We’ll continue to support local businesses as they turn their plans into action.”

Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “The rebound in business confidence suggests that firms might be in a stronger position for the next quarter. The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid more promising prospects for potential global trade agreements.

“Equally as encouragingly is the fact that trading prospects, wage expectations and hiring intentions also saw improvements this month. 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.”

Paul Kempster, Managing Director for Commercial Banking Coverage, Lloyds Business & Commercial said: “The jump in business confidence for our regions and nations is encouraging. It’s great to see that across many metrics, businesses are more hopeful for the future and are backing themselves for success in 2025.

“The East Midlands in particular saw the highest confidence levels at 66%, the highest the region has seen since 2018. As business confidence regains, we are committed to support businesses with a range of financial services to help them to seize opportunities and achieve their growth ambitions.”