Business confidence in the East Midlands rose 35 points during the beginning of June to 52%, the highest level of any UK region or nation, 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 36 points at 51%. When taken alongside their optimism in the economy, up 34 points to 52%, this gives a headline confidence reading of 52%.
East Midlands businesses identified their top target areas for growth in the next six months as investing in their team (37%), evolving their offer (22%) and introducing new technology (19%). The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. A net balance of 39% of businesses in the region expect to increase staff levels over the next year, up 29 points on last month.
Overall, UK business confidence increased by nine points to 37% in June, with all regions reporting a positive confidence reading. Eight out of 10 regions reported a higher confidence reading than in May.
Following the East Midlands, Scotland reported the second highest confidence reading at 50% (up 28 points month-on-month), followed by the North East at 47% (up 12 points month-on-month) and Yorkshire at 45% (up 26 points month-on-month). London and the South West were the only regions to report a decline in confidence. In London confidence fell by 10 points to 33%, while in the South West it fell by one point to 29%.
Business confidence for firms in the service sector rose to 37% (up 11 points), the highest seen since February 2022. With the recent spell of good weather and a reduction in food and energy prices, businesses in leisure and hospitality may be able reap the rewards in the months to come.
Manufacturing firms’ confidence also increased to its highest level since early 2022, rising to 50% (up 10 points) to outperform other sectors.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “Business confidence in the East Midlands has reached record-breaking levels for the year and it’s fantastic to see that firms are feeling positive about the next 12 months. We’re seeing this confidence translate into plans for investing in their team and new technology, both of which will stand them in good stead for future growth.
“Firms looking to invest should look at the tools available to ensure they have the capital needed for their growth strategy, be that sustainability-linked loans or working capital management facilities.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It’s encouraging to see business confidence rebounding following last month’s five-point dip to 28%. Trading prospects and optimism have seen a resurgence this month with overall confidence up in all but two of the twelve regions of the UK, which shows positive prospects across the wider economy.
“However, interest rate rises and cost pressures are still felt by many and we await to see the impact of the latest 50 basis point rise in the base rate. Meanwhile, expectations for average pay growth, although down slightly this month, appear to have picked up compared with the start of the year and remain elevated relative to pre-pandemic levels.”
