𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Business confidence in Scotland rose in May, with many firms “looking ahead with optimism” at their future trading prospects, according to a new report.

The latest Business Barometer from Lloyds bank found Scottish firms’ confidence in their own trading outlook rose to 62% in May, up nine points on the previous month.

When taken alongside firms’ level of optimism in the economy – which was down five points to 38% – this gives a headline confidence reading of 50%, a rise of two points compared with April.

This puts the level of business confidence in Scotland above that of the UK overall, where it stood at 47% – up three points on the month before.

Martyn Kendrick, Scotland director at Bank of Scotland commercial banking, said: “Scottish businesses are showing momentum, with confidence in their own trading prospects rising and firms looking ahead with optimism.

“Businesses are backing that confidence with action, with many planning to invest in training and new technology, demonstrating a clear commitment to long-term growth, innovation and building future capability.

“We’re here to support that momentum, whether it’s financing growth, helping with technology investment, or working with firms to develop their teams and capabilities.”

The report found the boost to confidence was driven by stronger customer demand and expected new contracts or clients (70%), while confidence in the economy was driven by stronger customer or market demand (60%).

Almost a third (31%) of businesses in Scotland also expect to increase staffing levels over the next year, down four points on last month.

Since May 2025, Scotland has had an average overall business confidence of 48%, with its largest figure of 59% in August last year and its lowest of 36% in December.

Over the next six months, Scotland’s businesses identified their top target areas for growth as investing in their team, such as through training (47%), introducing new technology, such as AI or automation (42%), and evolving their offering, for example by introducing new products or services (39%).

In the UK overall, firms’ trading outlook rose four points to 58% and their optimism in the economy generally rose two points to 35%.

Sixty-six per cent of firms said they expect stronger output over the year ahead, while 8% predict weaker activity.

The main drivers behind businesses expecting a decrease in activity remain the same as in April – economic uncertainty, higher cost pressures and weaker customer demand.

Business confidence rose across seven of the 12 UK regions and nations in May, and decreased in four.

Northern Ireland saw notable gains, with the North East of England and West Midlands becoming the most confident regions.

Amanda Murphy, chief executive for Lloyds business and commercial banking, said: “Business confidence edged up modestly in May, suggesting firms are beginning to steady after April’s decline.

“This month, confidence levels from businesses in the North East particularly stands out.

“It’s also reassuring to see that increased confidence from the construction sector has brought them more in line with their retail, services and manufacturing counterparts.

“Across the UK, each region and nation presents unique opportunities and drivers of growth – whether that’s clean energy in the North East, advanced manufacturing in the West Midlands or tourism and hospitality in Scotland.

“We’ve seen first-hand what the right financial support and advice can do for ambitious businesses and are keen to continue supporting our customers as they grow – helping Britain prosper.”