North West business confidence highest in the UK

Business confidence in the North West was the highest of all the UK regions and nations during August.

Confidence levels rose 26 points during the month, to 44%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported lower confidence in their own business prospects month-on-month, down 39 points at three per cent. When taken alongside their optimism in the economy, up 33 points to 38%, this gave an overall confidence reading of 44%.

A three-month average of local businesses’ confidence scores reveals a net confidence score of 35%, factoring in monthly scores of June, July and August.

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

The overall ‘balance’ of opinion weighs up the percentage of firms that are positive in outlook against those that are negative, and gives a net balance on a scale of -100 to 100.

North West businesses identified top growth opportunities for the next six months as investing in their teams (55%), diversifying into new markets (30%) and evolving their offering (29%).

A net balance of 43% of businesses in the region expect to increase staff levels over the next year, up 17 points on last month and also the highest in the UK.

Overall UK business confidence fell nine points during August to 16%. Firms’ outlook on their future trading prospects was down 32 points to 5%, and their optimism in the wider economy dropped six points to six per cent. The net balance of businesses planning to create new jobs also decreased five points to 16%.

While every UK region and nation reported a positive confidence reading in August – except the South East, where confidence dropped 15 points to zero per cent – only three recorded a month-on-month increase in optimism. After the North West, the other two regions were the South West – up 12 points to 23% – and Yorkshire – up nine points to 23%.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “The ongoing turbulence in the economy is evident in these latest figures, but the clear uptick in overall confidence is testament to the resilience that the region’s businesses are continuing to show.

“There is also still huge appetite among North West firms to welcome new staff and invest in existing talent, with businesses recognising the potential this creates to drive growth and differentiate themselves in the market.”

Confidence in the North East was unchanged at 31%. Confidence in the remaining regions fell mostly in line with the national decline.

There were notably bigger falls in East of England (two per cent, down 44 points) and Wales (one per cent, down 29 points).

The East of England showed a three month average confidence level of 26%, a fall of four points on the previous three months, while businesses in Wales reported a similar decrease across the three month view, down eight points to 22%, both broadly in line with the trend seen across the regions.

Business confidence is measured from -100% to +100%, with a net positive result showing the majority of firms are feeling confident in their overall outlook.

Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: “Business confidence declined for a third consecutive month as firms continue to face economic challenges in the period ahead and as inflation concerns intensify.

“Despite edging lower this month, the outlook for both wage and price pressures remains elevated. However, there are some brighter points as the demand for staff remains positive, and firms reported lower concerns about staffing issues and the pandemic.”