Latest report shows little change for South West business confidence

In December, business confidence in the South West region experienced a two-point decline, settling at 36%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

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

Companies in the South West reported a six-point drop in confidence regarding their own business prospects, settling at 46%.

However, economic optimism increased by three points, reaching 26%, resulting in an overall confidence reading of 36%.

On a national level, the overall UK business confidence also saw a decrease of seven points to 35% in December, with firms’ outlook on the economy declining by eleven points.

South West businesses identified key areas for growth in the next six months, with 36% focusing on entering new markets.

Other growth priorities included investing in their team (34%) and introducing new technology (28%).

Looking at the employment outlook, a net balance of 26% of businesses in the South West expect to increase staff levels over the next year, marking a decline of 13 points compared to the previous month.

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% in
the first three-months of 2023 and ending the year with a three month average of 39% – an indication of the positive trajectory business has seen this year. This provides a healthier position to begin 2024 with, compared to 2023.”