Business confidence in the South East bounces back – Lloyds Business Barometer

Business confidence in the South East returned to its highest level since June last year in February, rising 11 points to 16 per cent.

This is according to the latest Business Barometer from Lloyds Bank Commercial Banking, which found companies reporting higher month-on-month confidence business products, up 18 points to 26 per cent, and greater optimism in the economy, up one point to 5 per cent. Combined, this gives the headline reading of 16 per cent.

In the next six months, the region’s businesses identified diversifying into new markets (37 per cent), evolving their offer (34 per cent) and introducing new technology (28 per cent) as their main areas for targeting growth. 8 per cent of the region’s businesses plan to increase their staff numbers in the next year, up three points on last month.

Surveying 1,200 businesses every month, the business barometer offers early indications of UK economic trends. Across the country, confidence decreased by one point in February, taking it to 21 per cent.

Firms remained positive about their own trading prospects, with a net balance of 31% expecting business activity to increase in the coming 12 months. The number planning to hire new staff grew three points from January, taking it 20 per cent.

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Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “An increase in confidence is just the tonic for South East businesses who have been grappling with uncertainty in the economy, rising energy prices and a competitive labour market. The trick for our region’s businesses now will be converting this optimism into long-term growth plans. 

“I know from speaking to businesses leaders that many see opportunities in introducing sustainability measures, but inflation is affecting their ability to invest in Net Zero.

“Discounted lending via tools such as our Clean Growth Financing Initiative are making investing in sustainability much more affordable, while our Green Buildings Tool is helping firms to start their carbon reduction journey.”

Retail confidence also saw a rise, improving for the first time in three months to 21 per cent (up 14 points), led by improvements in both trading prospects and economic optimism. However, business confidence fell in construction (down eight points to 19 per cent) and services (down five points to 20 per cent) although this remains higher than in the latter part of 2022.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has lost a little momentum this month, following the strong gains seen recently. Firms are feeling more cautious about the wider economy. However, confidence in their own trading prospects continues to strengthen, helped by tentative signs that wage and other cost pressures may be reducing.

“While inflation appears to be tapering, pressures on consumers will need to ease further to help make it a more stable environment for businesses to operate.”

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