Lloyds Bank Business Barometer: Confidence surge in South East

Business confidence in the South East rose 13 points during April to 29%, its highest level since September 2018, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported higher confidence in their own business prospects month-on-month, up 16 points at 28%. When taken alongside their optimism in the economy, up 10 points to 31%, this gives a headline confidence reading of 29%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 9% of businesses in the South East expect to increase staff levels over the next year, up 9 points on last month and the first net positive reading since February 2020.

Overall UK business confidence surged 14 points in April to 29%, the highest reading since September 2018. The result follows the reopening of outdoor hospitality venues and non-essential retail and personal services providers in England and comes ahead of restrictions easing in Wales and Scotland. Firms’ confidence in their own business prospects rose by 14 points to 26%, and their optimism in the economy increased by 15 points to 32%.

Most UK regions and nations reported a month-on-month increase in confidence during April, with firms in the South West (up 22 points to 30%), London (up 20 points to 32%), the East Midlands (up 20 points to 40%) and Yorkshire and the Humber (up 20 points to 32%) reporting the largest surges. No nation or region reported a fall in confidence, and nowhere had a net-negative confidence reading for the first time since July 2019.

Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “It’s really encouraging to see that the outlook of South East firms is so positive as businesses take advantage of the first phase of lockdown restrictions easing. We expect this trend to continue when the region’s hospitality sector is able to welcome customers back indoors and later down the line with the revival of tourism in popular destinations like Brighton and the Isle of Wight.

“We will remain by the side of businesses across the South East to help them emerge from the pandemic and look forward to a brighter future.”

Confidence increased in all sectors, with manufacturing and retail confidence levels at three-year highs. Manufacturing stood out as the most positive sector (40%), likely reflecting strong global demand and notwithstanding ongoing supply chain issues. Meanwhile, retail confidence jumped to 39%, while construction confidence also increased to 28%. Services confidence rose to 25%, which was also the highest it has been since 2018.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “A third consecutive monthly rise in business confidence alongside the highest level of confidence for two-and-a-half years tells us a positive story about the UK’s continued economic recovery and leaves us optimistic about the road ahead. While uncertainties remain regarding the evolution of the pandemic, this month’s improvement in sentiment reflects a further easing of Covid-19 restrictions, while progress in vaccine deployment is raising hopes that the negative impact of the health crisis will continue to fall in the months ahead as the economy reopens.”