Businesses 'optimistic' about year ahead despite pandemic

Businesses in Scotland are now more optimistic about the year ahead than they have been for almost a decade, a financial report has found.

The latest Royal Bank of Scotland purchasing managers’ index (PMI) found firms were positive about the future despite still suffering the effects of the coronavirus pandemic.

The bank’s analysts noted improved confidence among private-sector firms, the highest recorded in its monthly reports since 2012.

Businesses said their optimism was boosted by hopes of a timely end to Covid-19 restrictions and a subsequent financial recovery.

It came despite the Scottish economy remaining stuck in a downturn during February.

The RBS business activity index found a sixth straight monthly reduction in new business and a drop in private-sector employment for the 13th month in a row.

Businesses said coronavirus restrictions and temporary closures had led them to cut back on staffing, although they also mentioned the government furlough scheme.

Malcolm Buchanan, chairman of the Scotland board at Royal Bank of Scotland, said: “Lockdown measures continued to stifle the Scottish economy in February.

“Both business activity and inflows of new work fell steeply again, although the rates of decline eased notably since January.

“Despite the challenging conditions, Scottish companies reported the strongest level of business confidence on record in February, with the lockdown road map prompting hopes of easing restrictions and a strong economic recovery in the coming year.”

The Royal Bank of Scotland PMI is compiled from responses to questionnaires sent to a panel of around 500 manufacturers and service providers.