Restriction easing delay 'caused drop in business confidence'

Postponing plans to ease coronavirus restrictions in Scotland may be behind a fall in business confidence, analysts have said.

Business confidence fell 14 points in July to 28%, according to the latest Business Barometer from the Bank of Scotland Commercial Banking.

The fall was the steepest among the nations and regions of the UK.

In late June, Nicola Sturgeon announced that plans to move the whole of Scotland to the lowest level of coronavirus restrictions – level zero – would be postponed from June 28 to July 19.

Most major legal restriction are expected to be lifted on August 9.

Scottish firms reported lower confidence in their own business prospects month on month, down nine points at 33%.

Combined with their optimism on the economy, down 20 points to 23%, this gives a headline confidence reading of 28%.

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

The UK as a whole experienced a much smaller drop in confidence month on month, down three points to 30%.

A net balance of 13% of businesses in Scotland expect to increase staff levels over the next year, down five points on last month.

Confidence dipped in broad economic sectors in Scotland, down from 35% to 33% for manufacturing, and 36% to 32% in retail, but was said to remain at “historically strong levels”.

The construction and services sectors also recorded marginal drops in confidence, down two points to 33% and three points to 28% respectively.

However, some subsectors showed particularly strong growth in confidence, with hospitality rising from 38% to 63% and transport jumping from 37% to 53%.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “The decision by the Scottish Government to postpone the complete easing of lockdown restrictions until August may have a part to play in the subdued confidence among Scottish firms this month.

“But while business optimism has taken a hit, the overall picture is still positive and we know many firms, particularly those in the hospitality and tourism industry, are gearing up to reopen fully and take advantage of what will hopefully be a busy summer season.”