Confidence dented by continuing uncertainty

WEST Midlands firms experienced a sharp fall in business confidence during December but remained the most positive UK region outside of London, according to new research.

The latest ‘Business Barometer’ report, published by Lloyds Bank Commercial Banking, suggests the region’s companies reported lower confidence in their business prospects, down 32 points to 35 per cent, and slightly lower economic optimism, which fell two points to 20 per cent.

Together, these bring the region’s overall confidence down to 27 per cent, 12 points below last month’s figure of 39 per cent.

However, confidence fell across the UK and the West Midlands remains the most confident region outside of London, where confidence dipped slightly to 32 per cent.

Nationally, overall confidence fell seven points to 17 per cent as UK firms’ optimism about the economy dropped ten points to seven per cent while companies’ confidence in their own business prospects slipped five points to 26 per cent.

Lloyds Bank said the fall in confidence in the West Midlands was reflected in local firms’ hiring intentions, with a net balance of 16 per cent expecting to hire more staff during the next year, down 16 points on last month.

A net balance of 22 per cent of West Midlands companies also said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity. This compares with a net balance of seven per cent who thought it was having a positive impact a month ago.

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

Businesses in London showed the most confidence, ahead of the West Midlands and Wales.

Those in Scotland were the least confident, with an overall confidence of minus nine per cent, 26 points below the national average.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “While business activity is still strong in the West Midlands, it appears that increased uncertainty and falling global demand this month have had an impact on firms’ confidence and hiring intentions.

“However, it is encouraging to see that businesses’ optimism about the UK economy has fallen only slightly, making it the most positive region outside of London and demonstrating the resilience of companies in the West Midlands.”

Increased uncertainty and falling global demand this month have had an impact on firms’ confidence Amanda Dorel