Region’s business confidence rises but remains in the red

Business confidence in the East Midlands rose four points during July to -25%, new figures reveal.

According to the latest Business Barometer from Lloyds Bank Commercial Banking, companies reported higher confidence in their own business prospects month-on-month at   -21%.  When taken alongside their views of the economy overall, this gives a headline confidence reading of -25%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during July, but with the picture improving month-on-month.

Two-thirds (65%) experienced a fall in demand for their products and services, down 12 points on the month before. Meanwhile, 5% experienced an increase in demand, although this was down two points on June.

With the Job Retention Scheme beginning to wind down from August, more than two-fifths (43%) of East Midlands firms surveyed said they didn’t have any workers furloughed.

When asked about social distancing measures, more than half (58%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although a quarter (25%) said they couldn’t operate fully within the rules.

Of the 56% of businesses reporting disruption to their supply chain during July, 23% expected the situation to improve within three months. No businesses expected it to take more than 12 months to return to normal levels.

Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “While only marginal, it’s encouraging to see the slight improvement in business confidence in the East Midlands this month.

“It’s the second consecutive rise in optimism since May’s historic low of -41%. We’re seeing this increase against the backdrop of Leicester’s local lockdown – which created added uncertainty and challenges for businesses region-wide. A rise in confidence under these circumstances is testament to local firms’ resilience.

“We will remain by the side of local businesses, helping them navigate the road to recovery.”