South West sees rise in business confidence

Business confidence in the South West rose three points during February to 42%, according to the latest Business Barometer from Lloyds.

While companies in the South West reported slightly lower confidence in their own business prospects month-on-month, down three points at 54%, their optimism in the economy rose 10 points to 30%.

Taken together, this gives a headline confidence reading of 42% (vs. 39% in January).

A net balance of 32% of businesses in the region also expect to increase staff levels over the next year, up seven points on last month.

Looking ahead to the next six months, South West businesses identified their top target areas for growth as investing in their team, for example through training and development (47%), evolving their offering, for instance by launching new products or services (46%) and introducing new technology such as automation or AI (37%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall, UK business confidence rose 12 points in February to 49% — its highest level since August 2024.

Firms’ optimism in their own trading prospects increased six points to 57%, while their confidence in the wider economy rose 18 points to 42%.

The North East was the most confident UK nation or region in February (69%), followed by the North West and East of England, both at 61%.

Sector Insights

All four sectors surveyed saw double-digit increases in confidence. The largest improvements were seen in manufacturing, which rose by 13 points to 51%, and construction, which increased by 14 points to 50%. Retail also experienced a significant gain, up 11 points to 51%, and services rose by 10 points to 48%.

Within the services sector, hospitality firms posted a particularly strong rebound in sentiment. Confidence across these sectors reached their highest levels in several months, ranging from four months in services to seven months in manufacturing.

Amanda Dorel, regional director for the South West at Lloyds said: “It’s heartening to see South West business confidence continue to rise – buoyed by greater economic optimism.

“Businesses are now setting out clear plans for further growth. Whether investing in their team, diversifying their offering or introducing new technology, we’ll continue to deliver our support to help make their ambitions a reality.”

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “The rise in business confidence demonstrates the resilience of UK businesses and their ability to navigate challenges, such as rising costs and uncertainty. Increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth.

“This chimes with the expectations businesses set out at the beginning of the year, where they predicted a strong start to 2025, with the majority (70%) expecting to see their turnover increase in the year ahead. To sustain this positive momentum, it is important that businesses continue to innovate and adapt, ensuring they remain competitive and resilient to future challenges.”