Scottish business confidence inches upward

Martyn Kendrick

This growth was driven by a significant 15-point surge in firms’ confidence regarding their own trading prospects, reaching 53 per cent. When taken alongside their optimism in the economy, down 13 points to 21 per cent, this gives a headline confidence reading of 37 per cent (vs. 36 per cent in December 2025).

Despite this cooling economic outlook, Scottish companies remain committed to expansion, with a net balance of 42 per cent planning to increase their headcount over the coming year.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example investing in training (53 per cent), evolving their offering, for example by introducing new products or services (36 per cent) and investing in sustainability (34 per cent).

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.

Overall, UK business confidence fell three points in January to 44 per cent. While firms’ confidence in their own trading prospects rose seven points to 59 per cent, their optimism in the wider economy fell 14 points to 28 per cent.

London was the most confident UK nation or region in January (68 per cent), followed by Northern Ireland (66 per cent) and the West Midlands (65 per cent).

Retail sentiment increased marginally in January, up two points to 49 per cent, while confidence in the service sector rose slightly, up one point to 42 per cent, the first increase since the summer. Confidence fell in the construction sector following a particularly strong increase in December.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s great to see businesses in Scotland remain confident. What’s especially positive is that more Scottish firms than anywhere else in the UK are planning to invest in sustainability from decarbonising their operations to making their products and services more sustainable.

“This is an important step as Scotland works towards its net zero target by 2045. We’ll continue to support businesses across Scotland as they strengthen their sustainability credentials, including through offerings like our Clean Growth Financing Initiative, which provides access to discounted lending to help fund a wide range of environmentally friendly measures.”