South West business confidence took a knock when the Government delayed its “day of freedom” by a month but firms are still upbeat about creating more jobs, a new report says.
The latest Business Barometer from Lloyds Bank Commercial Banking has revealed business confidence, particularly due to the region’s reliance on tourism and hospitality, slipped when ministers put back the easing of restrictions from June 21 to July 19.
But the report shows more South West employers are planning to recruit during the next year even though confidence dropped for the first time since January, falling six points to 36% in June.
Companies in the South West reported lower confidence in their own business prospects month-on-month, down 10 points at 29%. When taken alongside their optimism in the economy, down three points to 42%, this gives a headline confidence reading of 36%.
When it comes to jobs, a net balance of 17% of businesses in the region expect to increase staff levels over the next year, up eight points on last month.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “It’s clear that the build up to and eventual decision to delay the easing of lockdown restrictions has affected business confidence, especially among the South West’s world-class hospitality and tourism industry, which was preparing to reopen at full capacity.
“That aside, it’s encouraging to see sustained confidence in job creation, with firms planning on increasing staffing levels, something that will ultimately help drive the region’s economic recovery.”
Overall UK business confidence remained steady month-on-month at 33%. Firms reported a small increase in their business prospects up two points to 30%, the highest reading since September 2020. Confidence in the economy dipped marginally by two points to 36%.
Across the UK all regions and nations reported positive confidence readings for the third consecutive month. Businesses in Scotland (up 27 points to 42%), London (up 17 points to 41%) and the East of England (up ten points to 36%) reported the highest increases in overall confidence.
While confidence remained positive, firms in eight regions reported a month-on-month drop. The biggest decreases were in Yorkshire and Humber (down 14 points to 30%), the West Midlands (down 12 points to 29%), the North West (down nine points to 29%) and East Midlands (down nine points to 31%).
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
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The majority of responses were given before the various UK governments formally announced the delay to the removal of all limits on social contact, which was originally expected to happen on June 21 in England and close to that date in other parts of the UK.
However, it is likely that anticipation of the delay may have had a small negative impact in confidence particularly in the retail sector (down eight points to 36%) while manufacturing also fell (down 18 points to 35%).
Despite this, confidence remains at historically high levels across the broad industry sectors – in part due to services increasing by five points (31%) to its highest level in more than three years and construction remaining steady at 35%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “A fifth consecutive monthly increase in trading prospects and employment expectations highlights the resilience of UK businesses as they continue to recover from the challenges presented by the pandemic.
“Although we must now wait slightly longer for the last remaining Covid-19 restrictions to ease, it’s an encouraging sign that firms continue to have strong overall confidence in the outlook for the UK economy, as well as their expectations for their own growth prospects.”
