Business confidence is at its highest level in ten months as staff shortages and wage pressures ease, according to new data.

The Lloyds Bank Business Barometer, a survey of 1,200 companies with an annual turnover of more than £250,000, showed optimism about the economy in March rose by 11 points to 32%, with firms reporting their highest confidence levels since May last year.

In Scotland, confidence rose 24 points to 38%. Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), entering new markets (35%) and investing in sustainability (30%). 

A net balance of 33% of businesses in Scotland expect to increase staff levels over the next year, up 34 points on last month.. 

On average, firms felt positive about their own trading prospects with 39% of firms expecting business activity to increase in the next 12 months, up eight points on last month and 25% said they would increase staff levels by this time next year, up five points month-on-month.

Every UK region and nation had a positive confidence reading in March, with eight out of 11 regions recording a month-on-month increase in confidence.

For the second month in a row the West Midlands reported the highest levels of business confidence at 48% (unchanged month-on-month), followed by Scotland (up 24 points), London (up 20 points), and the North East (up two points) all at 38%. 

Paul Gordon, managing director for relationship management, Lloyds Bank Business & Commercial Banking, said: “It’s great to see economic optimism as well as trading prospects at a ten-month high.

“We can see from the data that this could well be down to a combination of a less obstructive hiring environment and the longer-term wage pressures trending downwards.”  

Chris Lawrie, area director for Scotland at Lloyds Bank Commercial Banking, said: “Scottish businesses are feeling confident about the months ahead and It’s great to see firms’ optimism in the overall economy is at its highest level since May 2022.”

Further evidence has emerged that Britain will avoid recession this year after

UK output grew in the final quarter of 2022, a revision on an earlier estimate that there was no growth.

GDP is now estimated to have increased from 0.1% in Q4, according to the Office for National Statistics.

The data adds to growing evidence that the economy will avoid recession this year.

UK output grew in the final quarter of 2022, a revision on an earlier estimate that there was no growth.

GDP is now estimated to have increased from 0.1% in Q4, according to the Office for National Statistics.

The data adds to growing evidence that the economy will avoid recession this year after the Office for National Statistics revised UK GDP upwards for the final quarter of 2022.

GDP is now estimated to have increased from 0.1% in Q4 against zero growth recorded in the initial reading for the final three months of last year.

The Office for Budget Responsibility has also said the UK will avoid recession while the latest Deloitte sponsored Fraser of Allander Institute commentary. indicates that the Scottish economy will contract by 0.7% this year, before returning to annual growth in 2024 of 0.9%.