West Midlands business confidence edges to two-year high
Businesses in the West Midlands are more confident than at any point since the EU Referendum vote two years ago, according to data released today.
But the latest Business in Britain report from Lloyds Bank shows that, despite confidence – calculated as an average of respondents’ expected sales, orders and profits over the next six months – rising one point to 29 in the past six months, firms are not increasing their investment or recruitment plans.
Instead, the net balance of firms looking to grow investment in the next six months fell by two points to nine per cent, compared with January.
And the net balance of businesses looking to hire more staff fell by seven points to seven per cent since the start of the year.
The share of firms that reported difficulties hiring skilled labour rose 13 points to 57%.
The number expecting to increase pay fell by 15 points to 14%.
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Across the UK, business confidence was highest in London (31%), followed by the South East (30%) while the lowest level of confidence was in the East Midlands (14%) and the North West (19%).
Glen Wilson, regional director at Lloyds Bank Commercial Banking, said: “There is no doubt that West Midlands businesses are facing challenges at the moment, with Brexit uncertainty and concerns over domestic demand highest among them.
“But the fact that confidence is growing suggests more and more firms are becoming increasingly comfortable navigating through the political and economic fog. England’s better-than-expected performance at the World Cup will also boost the nation’s feel-good factor.
“But despite the confidence, many businesses have become more cautious, sticking to or even revising downwards their investment and recruitment plans. While there is a degree to which this may be prudent amid such uncertainty, businesses need to ensure they are not missing out on the opportunities being created amid the current turbulence.”
| Confidence Index | |||
| Region | Jul 2018 | Jan 2018 | Change (Jan – July) |
| London | 31 per cent | 25 per cent | +6pts |
| South East | 30 per cent | 24 per cent | +6pts |
| South West | 29 per cent | 19 per cent | +10pts |
| West Midlands | 29 per cent | 28 per cent | +1pts |
| North East | 25 per cent | 38 per cent | -13pts |
| East of England | 25 per cent | 18 per cent | +7pts |
| Wales | 23 per cent | 20 per cent | +3pts |
| Yorkshire & Humber | 23 per cent | 15 per cent | +8pts |
| Scotland | 20 per cent | 17 per cent | +3pts |
| North West | 19 per cent | 31 per cent | -12pts |
| East Midlands | 14 per cent | 24 per cent | -10pts |
The report said that Brexit uncertainty is now the single greatest risk to firms in the West Midlands in the next six months, cited by 19% of firms in the region.
The proportion of West Midlands firms reporting weaker UK demand as their greatest risk remained high at 18%, while those citing extra regulation rose slightly to 12% from 11% in January.
More than a quarter (29%) of firms in the West Midlands expect a negative impact on their business if no trade agreement is reached with the EU. Almost a quarter expect a positive impact, while 47% either do not expect any impact or said they didn’t know.
Nationally, business confidence was highest in the transport & communication and construction sectors, with the construction sector in particular registering a significant rise compared with January’s survey, rising 12 points to 26%.
Confidence was lowest in retail and wholesale, and in hospitality and leisure, both of which saw confidence fall since January.
