South West business confidence slumps to lowest in the UK - Lloyds Bank
Business confidence in the South West has slumped to the lowest in the UK. It fell nine points during February to one per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South West reported higher confidence in their own business prospects month-on-month, up five points to 19 per cent. When taken alongside their optimism in the economy, down 23 points to -16 per cent, this gives a headline confidence reading of 1 per cent.
South West businesses identified their top target areas for growth in the next six months as evolving product or service offerings (34 per cent), investing in sustainability (31 per cent), and investing in their teams (27 per cent).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of eight per cent of businesses in the region expect to reduce staff levels over the next year, up six points on last month when a net balance of two per cent of firms planned to reduce headcount.
Overall UK business confidence decreased by just one point to 21 per cent in February. Firms remained positive about their own trading prospects with a net balance of 31 per cent expecting business activity to increase in the coming 12 months.
Firms also reported plans to create new jobs with 20 per cent of businesses intending to make new hires over the next 12 months – up three points from January.
All UK regions and nations reported a positive confidence reading in February, with six areas reporting a month-on-month increase in confidence. Of those, the West Midlands (up 30 points to 48 per cent) and Yorkshire and Humber (up 22 points to 34 per cent) saw the largest monthly increases.
Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: “Despite a dip in overall confidence levels, it's encouraging that businesses remain optimistic in their own trading prospects as they seek opportunities for growth.
“But we know many businesses, particularly those in our region’s hospitality and leisure sector are struggling with reduced consumer demand and find the current economic outlook troubling. Firms that act now to manage their working capital while also investing in their teams will stay ahead of the pack and be best placed to capitalise on potential prospects.”
Retail confidence bounced back, rising 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.”
