West Midlands’ businesses finish the year with confidence

Business confidence in the West Midlands rose one point during December to 33%, 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 three points at 34 per cent. When taken alongside their optimism in the economy, which remained the same at 33 per cent, this gives a headline confidence reading of 33 per cent. Firms in the West and East Midlands were the only regions to report an increase in confidence. 

West Midlands businesses identified their top target areas for growth in the next six months as investing in their team (45 per cent), evolving their offer (37 per cent) and introducing new technology (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 29 per cent of businesses in the region expect to increase staff levels over the next year, down three points on last month.  

Overall UK business confidence fell two points in December to 35 per cent, the first decrease since August, driven largely by firms’ outlook on the overall UK economy which dipped by eleven points from 38 per cent to 27 per cent. Businesses’ optimism in their own trading prospects also decreased, but less markedly so – by five points to 43 per cent.   

Companies’ hiring intentions also dropped slightly with 29 per cent of firms intending to increase staff levels over the next 12 months, down six points month-on-month.  

Firms in the services industry reported a significant decrease in confidence, down 16 points to 30 per cent, due to moderation in both trading prospects and economic optimism. Manufacturing confidence also eased back. However, retail and construction both bucked the trend with rises to 44 per cent (up two points) and 37 per cent(up two points) respectively.    

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “It’s great to see the Midlands leading the way this month, with both the West and East reporting an increase in confidence. Businesses were surveyed following the Autumn Statement, where a West Midlands Investment Zone was announced, with hopes that it will drive up to £5.5bn of growth and create 30,000 new jobs.  

“With the region’s new investment zone set to focus on green industries, a new battery gigafactory in Coventry and a Green Innovation Corridor in Wolverhampton as part of the plans, sustainability will be a key growth area for West Midlands businesses in 2024. We will be by the side of local firms looking to take advantage of the opportunities to invest in developing green products and services.”  

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “This December data was collected following several key announcements, including energy prices rises and the UK economic outlook being revised down in the Autumn Statement. All of this will undoubtedly have had an impact on business confidence as we head into 2024.  

“Businesses are also balancing cost pressures with a challenging labour market that will see increases to minimum wage in April 2024, as perhaps indicated in the wage growth figures, at a time when they are managing staff retention and recruitment decisions. 

“However, over the course of the year confidence has steadily increased from an average confidence of 25 per cent in the first three months of 2023 and ending the year with a three month average of 39 per cent - an indication of the positive trajectory business has seen this year. This provides a healthier position to begin 2024 with, compared to 2023.”