Scottish business confidence rose in May, with many firms looking ahead with optimism regarding their future trading prospects, according to the latest Business Barometer from Lloyds bank.
Confidence Levels on the Rise
The report found that Scottish firms' confidence in their own trading outlook increased to 62% in May, up nine points from the previous month. When combined with firms' optimism in the economy—which fell five points to 38%—the headline confidence reading stands at 50%, a rise of two points compared with April.
This places Scottish business confidence above the UK overall figure of 47%, which itself rose three points month-on-month.
Drivers of Confidence
The boost in confidence was driven by stronger customer demand and expectations of new contracts or clients (70%), while confidence in the economy was underpinned by stronger customer or market demand (60%).
Almost a third (31%) of businesses in Scotland expect to increase staffing levels over the next year, down four points from last month.
Long-Term Trends
Since May 2025, Scotland has averaged an overall business confidence of 48%, with a peak of 59% in August last year and a low of 36% in December. Over the next six months, firms identified their top growth priorities as investing in their team through training (47%), introducing new technology such as AI or automation (42%), and evolving their offering with new products or services (39%).
UK-Wide Picture
Across the UK, firms' trading outlook rose four points to 58%, while optimism in the economy increased two points to 35%. Sixty-six per cent of firms expect stronger output over the year ahead, while 8% predict weaker activity. The main factors behind expectations of decreased activity remain economic uncertainty, higher cost pressures, and weaker customer demand.
Business confidence rose in seven of the 12 UK regions and nations in May, with Northern Ireland seeing notable gains. The North East of England and West Midlands emerged as the most confident regions.
Expert Commentary
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.”
Amanda Murphy, chief executive for Lloyds business and commercial banking, added: “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.”
