South East business confidence is on the rise – Lloyds Bank Business Barometer

Business confidence in the South East rose five points during August to 32%, its highest level since May, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported higher confidence in their own business prospects month-on-month, up four points at 30%. When taken alongside their optimism in the economy, up six points to 34%, this gives a headline confidence reading of 32%.

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

11% of businesses in the South East expect to increase staff levels over the next year, the same as last month. 

Overall, UK business confidence rose six points in August, reaching 36%, the highest level recorded since May 2018. When asked about their overall trading prospects, businesses reported a six-point increase on July’s reading at 34% and firms’ confidence in the economy also increased six points to 39%.

All UK nations and regions had a positive confidence reading in August. The most confident regions were the North West (64%), North East (46%), and London (41%). All bar three areas reported a growth in confidence in August, with the East Midlands (down 10 points to 28%), West Midlands (down three points to 27%), and Yorkshire and Humber (down two points to 26%) reporting marginal falls.

Paul Evans, Regional Director for the South East at Lloyds Bank Commercial Banking, said: "The ongoing vaccination drive and gradual return of tourism to the region are clearly having a positive impact on the outlook of South East firms. After an extremely challenging 18 months for so many businesses, they will be hoping for no more bumps in the road as we emerge from the disruption."

In sector terms, there was notable strength in sectors benefiting from the further easing of Covid restrictions. Services confidence saw the greatest month-on-month increase, rising by 8 points to 36%, the highest level since January 2018. Confidence in both manufacturing and construction also picked up (both up 7 points to 40%), led by rises in trading prospects for the year ahead. The increase in manufacturing confidence came despite ongoing supply disruptions, although the level remains below the high in May. Retail confidence posted a smaller 2-point rise to 34%, remaining below the recent peak in May.

Hann-Ju Ho, Senior Economist for Lloyds Bank Commercial Banking, said: "Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery. This confidence is driven by the continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.

"Staff shortages remain a challenge, but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead."

The Business Barometer

• The Business Barometer’s measure of overall business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects.
• The overall 'balance' of opinion weighs up the percentage of firms that are positive in outlook against those that are negative. Responses are weighted to reflect the composition of the economy. 
• The industrial sector in this report represents mainly manufacturing and construction; the consumer services sector comprises distribution and transport and communications; business and other services consists of financial and business services and the public sector. 
• The Business Barometer results provide early signals about UK economic trends. The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BVA BDRC. 
• This survey was conducted with 1,200 companies – including 144 businesses in the South East  – between 1st and 15th July 2021

About Lloyds Bank

Lloyds Bank Commercial Banking provides comprehensive expert financial services for small businesses, mid-sized businesses and multinational corporations.