Business confidence in South West takes a hit

Business confidence in the South West fell in March – according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the South West reported lower confidence in their own business prospects month-on-month, down nine points at 28%.
When taken alongside the optimism in the economy, down 15 points to 9%, this gives a headline confidence reading of 18%.

Looking ahead to the next six months, South West businesses identified their top target areas for growth as investing in their team, for example by hiring new staff or investing in training (39%), and introducing new technology, such as automation or AI (32%). The same proportion (31%) said they planned to enter new markets, for example by diversifying into adjacent markets, or exporting to new ones, or evolving their offering, for example by introducing new products or services.

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%).

Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: “South West businesses are still operating in challenging, fast-changing economic conditions. However, there are signs of positive trends – including slowing inflation – that could help boost confidence if they continue over the months ahead.

“Encouragingly, businesses are still planning to make investments in their teams and their operations to drive further growth, from training to entering new markets. For the region’s seasonal economy – particularly hospitality and tourism – many will now be preparing to maximise peak season.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With businesses reporting 42% confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices.

“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months. It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms.

“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”