Scottish business confidence sees sharp rise after vaccine rollout, but remains negative


21 December 2020

  • Overall confidence of firms in Scotland rose 29 points in the past month to -9%
  • Companies in three of 12 UK nations and regions return to net optimistic position for the first time since March
  • Report shows biggest month-on-month improvement in UK business confidence in four years after vaccine rollout begins

Business confidence in Scotland increased to its highest point since the pandemic began in March, rising 29 points month-on-month to -9% during December, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Scottish firms’ optimism towards the economy increased by 38 points month-on-month to -12%, while confidence in their own business prospects rose 20 points to -7%.  Together, this gives a headline confidence reading of -9%.

Businesses’ hiring intentions showed that a net balance of 33% of businesses in Scotland expect to reduce staff levels over the next year, down 10 points on last month.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Across the UK, overall confidence saw its largest monthly increase for more than four years in December, following vaccine progression announcements. Confidence climbed by seventeen points to -4% in November to -4%. Economic optimism jumped 23 points to -5%, while firms’ confidence about their trading prospects increased 11 points to -3%.

All 12 UK nations and regions saw a rise in overall confidence during December. The most marked improvements were reported in Scotland (up twenty-nine points to -9%); the South West (up twenty-two points to 5%) and the West Midlands (up twenty-two points to 4%). The North East, South West and West Midlands all moved into net positive territory for the first time since March this year.

The South West recorded highest confidence at 5%, followed by the West Midlands and South West, each at 4%. The North West had the lowest confidence during December at      -13%, despite confidence increasing month-on-month by 15 points.

"To see an increase in the confidence of Scottish businesses is a step in the right direction as we come to the end of what has been a very difficult year. The roll-out of the vaccine should buoy spirits further as it helps to bring light to a Covid-19 exit strategy, but this optimism could falter in coming months with continued uncertainty over lockdown restrictions.

“Whatever the new year brings, we’ll continue to be by the side of businesses across Scotland, as we all work together to support the country’s recovery from the pandemic.”

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking

National overview

In the industry sectors, confidence reached the highest levels seen since the start of the pandemic. Manufacturing reported a strong rebound this month despite looming uncertainty during the survey period about the UK’s new trading arrangements with the EU, surging by twenty-five points, from -25% to 0%.

This was followed by a growth in confidence for construction, which rose by eighteen points to -5%; services, which jumped by sixteen points to -5% and the retail sector which reported an eleven point lift in confidence to -1%. Nevertheless, entering the holiday trading period, confidence in retail, as in other sectors, remains below the long-term average. 

“It has been encouraging to see a clean sweep of regional confidence increases this month. Despite the regional restrictions across the UK, it is promising to see regions beginning to report above-average confidence figures. While we can primarily attribute this uptick to the news of the vaccine progress, it has also injected a boost in confidence for the sectors, with manufacturing rebounding strongly and other sectors following suit. We know that confidence has been volatile in 2021, it is positive to see this sharp rise in confidence and we hope this continues through to the New Year.”


Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking

“The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU. While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.” 

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking