South East: Business confidence bounces back to pre-pandemic levels

Business confidence in the South East rose 12 points during March to 16%, the highest level since February 2020, according to the latest Business Barometer from Lloyds Bank Commercial Banking. The data has been released just a week after the one-year anniversary of the first Covid-19 lockdown.

Companies reported higher confidence in their own business prospects month-on-month, up three points at 12%. When taken alongside their optimism in the economy, up 21 points to 21%, this gives a headline confidence reading of 16%.

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

When it comes to jobs, firms in the South East are equally split on whether they will increase or reduce staff levels over the next year. In February, 11% of firms had planned to reduce staff levels during the next 12 months.

The national picture

Overall UK business confidence rose for a second consecutive month in March. Firms’ confidence increased by 13 points to 15%, the highest reading since February 2020, before coronavirus was confirmed as a pandemic by the World Health Organisation.

UK firms’ economic optimism also increased by 15 points to 17%, while confidence in their own business prospects jumped 10 points to 12%.

In fact, every UK region and nation reported an increase in overall confidence during March, with most reporting a double-digit rise month-on-month. The North East (1% to 26%), West Midlands (3% to 27%) and East of England (-8% to 12%) reported the largest increases. Scotland was the only area to remain in net negative territory despite an increase in confidence, giving a reading of -2%.

Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “As we mark the anniversary of the first lockdown, businesses across the South East have been buoyed by the imminent easing of restrictions, and this increase in confidence may well continue as the region’s famous hospitality sector reopens its doors in April.

“Whatever lies ahead, we’ll remain by the side of firms across the South East to help them emerge from the uncertainty and accelerate their post-pandemic recovery.”

In the sectors, manufacturing and retail recorded the highest confidence levels, both at 25%, while services and construction rose to 11% and 12% respectively

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “It’s been a year since the first lockdown and the surge in confidence this month tells us firms are increasingly confident about economic recovery.

“The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures. It will be interesting to see whether the momentum for stronger business optimism is sustained in the months ahead.”