BREXIT is weighing on Scottish companies’ expectations for business activity, and their overall confidence fell sharply in March, a survey shows.

A net 13 per cent of Scottish businesses feel the UK’s exit from the European Union is having a negative impact on their expectations for activity, subtracting the proportion believing Brexit is having no such effect from that considering it is weighing on projected output.

The latest business barometer from Bank of Scotland also shows a net 10% of Scottish companies expect to hire more staff this year. The bank noted this represented a fall in hiring intentions from the previous month’s survey.

A net 18% of companies north of the Border are forecasting an increase in business activity, in this month’s survey, with Bank of Scotland noting this is a lower balance than in February.

Jane Clark-Hutchison, regional director for mid markets at Bank of Scotland, said: “Scottish businesses are feeling the effects of uncertainty, which is why we have seen a fall in economic confidence at the end of the quarter. However, this still remains in positive territory.

“As a result, we are still seeing businesses looking to hire and planning for growth with a sense of cautious optimism, which is encouraging considering the unsettled landscape.”

Across the UK, Bank of Scotland parent Lloyds Banking Group found confidence was highest among businesses in London, with companies in the West Midlands next most upbeat overall.

The transport and manufacturing sectors recorded the greatest confidence levels across the UK. Confidence was weakest in the wholesale, and hospitality and leisure sectors.