Scottish business confidence rose two points to 50% in May, moving ahead of the UK-wide reading for the second time since the end of 2025, according to the latest Lloyds Bank Business Barometer. Companies reported stronger optimism about their own trading prospects, even as confidence in the wider economy dipped.
Scottish firms’ confidence in their own trading outlook climbed nine points to 62% in May. Factoring in a five‑point fall in optimism about the economy to 38% gives a net headline confidence figure of 50%, up from 48% in April 2026. Lloyds’ survey shows that sentiment in Scotland has now exceeded the overall UK confidence level of 47% in two separate months since late 2025.
Respondents in Scotland linked their stronger trading outlook to firmer customer demand and expectations of new contracts or clients, with 70% citing these as the main drivers. Confidence in the wider economy was also underpinned by stronger customer or market demand, highlighted by 60% of businesses. The pattern suggests Scottish operators see more resilience in their own order books than in macroeconomic conditions.
Staffing plans point to continued, if slightly softer, hiring intentions. Almost a third (31%) of Scottish businesses expect to increase headcount over the next year, down four percentage points on last month’s reading. Since May 2025, Scotland’s average overall business confidence has stood at 48%, peaking at 59% last August and bottoming out at 36% in December.
Over the next six months, firms identified three priority areas for growth investment. Investing in people – for example through training – topped the list at 47%, followed by adopting new technology such as artificial intelligence or automation at 42%, and evolving their offer through new products or services at 39%. For an investor‑grade audience, this mix points to a pipeline of skills, productivity and innovation spending across Scottish sectors.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said Scottish firms are building on this momentum. “Scottish businesses are showing momentum, with confidence in their own trading prospects rising and firms looking ahead with optimism.” He added: “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.”
Across the UK, overall business confidence rose three points in May to 47%. Firms’ trading outlook increased four points to 58%, while optimism about the broader economy rose two points to 35%. Sixty‑six percent of companies expect stronger output over the coming year, compared with 8% who anticipate weaker activity.
The survey points to familiar pressures among businesses that do expect activity to fall. Economic uncertainty, higher cost pressures and weaker customer demand remained the main reasons cited for expecting a downturn, unchanged from April. For Scottish operators, those headwinds frame the backdrop to decisions on hiring, investment and pricing over the rest of 2026.
Regionally, business confidence rose in seven of the twelve UK regions and nations in May and fell in four. Northern Ireland recorded notable gains, while the North East of England and West Midlands emerged as the most confident regions. Against that landscape, Scotland’s latest reading keeps it among the more upbeat parts of the UK on headline sentiment.
Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said the May data suggests firms are beginning to stabilise after April’s setback. “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.” She added that each region and nation presents distinct growth opportunities.
“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.” For Scottish firms, the combination of firmer confidence, a tilt toward training and technology investment, and targeted support from lenders will be key markers to watch as they navigate the rest of the year.
