Business confidence in the SE falls to lowest in the UK

BUSINESS confidence in the South East fell 26 points during October to -11 per cent, the lowest of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between October 3 and 17.

Companies in the region reported lower confidence in their own business prospects month-on-month, down 15 points at 13 per cent.

When taken alongside their optimism in the economy, down 36 points to -33 per cent, this gives a headline confidence reading of -11 per cent.

A three-month average of local businesses’ confidence sits at four per cent, factoring in monthly scores of August, September and October.

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

South East businesses identified their top target areas for growth in the next six months as evolving their offering (44 per cent), diversifying into new markets (31 per cent) and investing in their teams (26 per cent).

A net balance of one per cent of businesses in the region expect to increase staff levels over the next year, down 16 points on last month.

Overall UK business confidence fell one point during October to 15 per cent, in line with the average over the last three months.

Firms’ outlook on their future trading prospects was up two points to 27 per cent, and a net balance of 21 per cent are planning to create new jobs, up four points on last month.

However, businesses optimism in the wider economy dropped three points to two per cent.

Five UK regions and nations recorded a month-onmonth increase in optimism in October.

Of those, London (up 16 points to 49 per cent), the North West (up 14 points to 28 per cent) and Wales (up nine points to five per cent) saw the largest monthly increases, with London remaining the most optimistic region overall.

Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “While the wider economic picture has contributed to a drop in overall confidence, local companies’ belief in their own trading prospects remains in positive territory and many will be looking to capitalise on this in the coming months.

“Readying themselves for growth will rely on businesses closely monitoring working capital levels, as well as being aware of financing options like invoice discounting to help them free up additional cash for investment.”

Business confidence in the manufacturing sector fell for the fifth month in a row, to 13 per cent, down one percentage point, the lowest confidence level since February 2021.

Confidence in the retail sector declined by six percentage points to nine per cent, while confidence in the services sector also fell to 16 per cent, both the lowest levels since early 2021.

However, the construction sector saw a 10 percentage point rise to 20 per cent, although this level still remains weaker than in the first half of the year.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While business confidence has marginally fallen this month, along with a drop in forward looking economic optimism, it is encouraging to see businesses still looking to increase their headcounts.

“However, cost pressures remain evident as businesses raise prices to protect their margins and wage pressure continues to be impactful.

“Given the recent turbulence in financial markets, it will be interesting to see how this will affect business confidence.”