Fears over economy drive down North West business confidence levels

Lack of business confidence in the UK economy has driven down the March Lloyds Bank Commercial Banking Business Barometer.

Confidence levels in the North West fell by six points during March to 43%.

Companies in the region reported higher confidence in their own business prospects month-on-month, up one point to 55%.

However, their optimism in the economy fell 12 points to 31%, giving a headline confidence reading of 43% (vs. 49% in February).

Looking ahead to the next six months, North West businesses identified their top target areas for growth as entering new markets, for example by diversifying into adjacent markets or exporting to new ones (37%), evolving their offering, including by introducing new products or services (32%) and introducing new technology, such as automation or AI (32%).

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

Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).

Yorkshire and the Humber was the most confident UK nation or region in March (60%), followed by the North East (56%) and London (52%).

Across the sectors, services confidence fell five points to 40%, the first decline since December.

That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.

The gains in manufacturing (up one point to 41%) and construction (up two points to 40%) were relatively modest and confidence remained below levels seen at the start of 2024.

Firms in the retail sector reported improved confidence (up five points to 45%), which was the strongest result for more than two years.

Chris Whittle, area director in the North West at Lloyds Bank Commercial Banking, said: “It’s hugely encouraging to see that, even though businesses are less optimistic about the economy, their confidence in their own prospects has only strengthened.

“This reflects the hard work North West firms have put in to build resilience and successfully adapt to a fast moving environment.”