Business confidence in Scotland declines as economy concerns rise

In January 2025, Scotland experienced a notable decline in business confidence, reflecting growing concerns among companies about the economic landscape. According to the Bank of Scotland's business barometer, confidence fell by two points to 42 percent, signaling a shift in sentiment. While businesses have shown greater optimism regarding their own prospects—an increase of 14 points to 53 percent—their outlook on the overall economy suffered significantly, dropping 17 points to just 32 percent. This declining confidence can be attributed to several factors impacting the Scottish business sector. Retailers and hospitality businesses were particularly affected, as evidenced by a survey revealing heightened pessimism among these industries. The recent changes in national insurance contributions, which decreased the earnings threshold for employers and raised the main rate substantially, contributed to financial strains for businesses reliant on low-income workers. The policy changes, meant to address budgetary concerns, have sparked discontent in the affected sectors. In addition to this governmental shift, uncertainty surrounding Brexit has continued to plague businesses, further dampening their outlook. Scotland's economy, like the rest of the UK, is navigating the complexities post-Brexit, leading to concerns about trade costs and regulatory changes that could impact growth. Companies have reported a £4 billion cost to trade tied to Brexit, adding to the strain. Despite these negative sentiments, some businesses expressed a focus on growth, with many stating that introducing new products and services will be pivotal in the coming months. Martyn Kendrick of Bank of Scotland noted that while overall confidence has weakened, the pursuit of innovation and expansion remains a common theme among sectors trying to adapt to these challenges. This resilience amid difficulties suggests that while confidence has dipped, the drive to succeed continues amongst Scottish entrepreneurs who remain hopeful for recovery and opportunities ahead.