Business confidence falls across the South West and West Midlands, but nationally it's steady

Disappointingly confidence has fallen across the South West and West Midlands according to new data from Lloyds Bank Commercial Banking's business barometer.

Companies in the South West reported lower confidence in their own business prospects month-on-month, down nine points at 28 per cent. In the West Midlands, confidence was down 33 points to 17 per cent.

However, overall UK business confidence registered 42 per cent in March, the same as in February, as firms’ confidence in their own trading prospects held steady, and confidence in the economy strengthened by one point. So both our regions are outliers.

Yorkshire and the Humber was the most confident UK nation or region in March (60 per cent), followed by the North East (56 per cent) and London (52 per cent). 

Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: "

“South West businesses are still operating in challenging, fast-changing economic conditions. However, there are signs of positive trends – including slowing inflation – that could help boost confidence if they continue over the months ahead.

“Encouragingly, businesses are still planning to make investments in their teams and their operations to drive further growth, from training to entering new markets. For the region’s seasonal economy – particularly hospitality and tourism – many will now be preparing to maximise peak season."

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, added:

“While confidence has fallen this month, it’s encouraging that many businesses are still looking towards growth opportunities, whether investing in their teams or launching new products and services. 

“This tenacity, resilience and focus on growth – coupled with maintaining a laser-focus on healthy working capital – will help ensure businesses are in the strongest possible position to make the most of upswings in demand, and manage any slower periods. 

“Although these remain challenging and fast-changing economic conditions, there are bright spots on the horizon, including slowing inflation."

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: "

“With businesses reporting 42 per cent confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices. 

“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months.  It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms. 

“Among the regions there was a mixed picture. Following unusually low confidence in February, London bounced back with a 14-point increase to bring the capital back in line with typical figures reported for the area, although the greatest confidence was shown by businesses in Yorkshire & the Humber who reported a 29-point rise, making it the most confident region overall. However, businesses in the Midlands saw a significant fall which seems to be an outlier compared to recent results. 

“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”