Friday good news: Business confidence rises across South West and West Midlands
Business confidence across the South West and West Midlands rose nine points during February to 42 per cent and 60 per cent respectively, according to the latest Business Barometer from Lloyds.
While companies in the South West reported slightly lower confidence in their own business prospects month-on-month, down three points at 54 per cent, their optimism in the economy rose 10 points to 30 per cent.
A net balance of 32 per cent of businesses in the region also expect to increase staff levels over the next year, up seven points on last month.
Looking ahead to the next six months, South West businesses identified their top target areas for growth as investing in their team, for example through training and development, evolving their offering, for instance by launching new products or services and introducing new technology such as automation or AI.
Companies in the West Midlands reported higher confidence in their own business prospects month-on-month, up five points at 65 per cent. When taken alongside their optimism in the economy, up 12 points to 55 per cent.
Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as evolving their offering, for example through new products and services, entering new markets and investing in their team, for example through training and development.
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
Overall, UK business confidence rose 12 points in February to 49 per cent — its highest level since August 2024.
Firms’ optimism in their own trading prospects increased six points to 57 per cent, while their confidence in the wider economy rose 18 points to 42 per cent.
The North East was the most confident UK nation or region in February, followed by the North West and East of England.
All four sectors surveyed saw double-digit increases in confidence. The largest improvements were seen in manufacturing, which rose by 13 points to 51 per cent, and construction, which increased by 14 points to 50 per cent. Retail also experienced a significant gain, up 11 points to 51 per cent, and services rose by 10 points to 48 per cent.
Within the services sector, hospitality firms posted a particularly strong rebound in sentiment. Confidence across these sectors reached their highest levels in several months, ranging from four months in services to seven months in manufacturing.
Dave Atkinson, regional director for the West Midlands at Lloyds, said: “Business confidence has risen for a second month in a row, driven by brighter trading and economic outlooks from local firms.
“The growth plans that West Midlands companies are setting out reflect the region’s entrepreneurial spirit. We’ll continue to support the region’s businesses as they press on with their growth strategies for the year ahead.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “The rise in business confidence demonstrates the resilience of UK businesses and their ability to navigate challenges, such as rising costs and uncertainty. Increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth.
“This chimes with the expectations businesses set out at the beginning of the year, where they predicted a strong start to 2025, with the majority (70%) expecting to see their turnover increase in the year ahead. To sustain this positive momentum, it is important that businesses continue to innovate and adapt, ensuring they remain competitive and resilient to future challenges.”
