Business confidence in East Midlands rose by five points during December to 34% – one of only two regions to report an increase – according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Firms in East Midlands saw a five point increase while those in West Midlands saw confidence up by one point to 33%.
Companies in the region reported higher confidence in their own business prospects month-on-month, up 13 points at 51%. When taken alongside their optimism in the economy, down four points to 17%, this gives a headline confidence reading of 34%.
East Midlands businesses identified their top target areas for growth in the next six months as investing in their team (51%), evolving their offer (32%) and investing in sustainability (26%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 40% of businesses in the region expect to increase staff levels over the next year, up ten points on last month.
Overall UK business confidence fell two points in December to 35%, the first decrease since August, driven largely by firms’ outlook on the overall UK economy which dipped by eleven points from 38% to 27%. Businesses’ optimism in their own trading prospects also decreased, but less markedly so – by five points to 43%.
Companies’ hiring intentions also dropped slightly with 29% of firms intending to increase staff levels over the next 12 months, down six points month-on-month.
The North East was most confident, remaining at 48% for the second consecutive month, followed by the East of England (45%), London (38%) and the South West (36%).
Firms in the services industry reported a significant decrease in confidence, down 16 points to 30%, due to moderation in both trading prospects and economic optimism.
Manufacturing confidence also eased back (38%, down seven points). However, retail and construction both bucked the trend with rises to 44% (up two points) and 37% (up two points) respectively.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “Businesses in the East Midlands have marked the largest rise in confidence of any UK region or country as we conclude the year.
“The rise was recorded following the Chancellor’s Autumn Statement where a new East Midlands Investment Zone, which could bring in £383m of private investment and create 4,200 jobs, as well as a deal to bring devolution to Greater Lincolnshire, was announced.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “This December data was collected following several key announcements, including energy prices rises and the UK economic outlook being revised down in the Autumn Statement. All of this will undoubtedly have had an impact on business confidence as we head into 2024.
“Businesses are also balancing cost pressures with a challenging labour market that will see increases to minimum wage in April 2024, as perhaps indicated in the wage growth figures, at a time when they are managing staff retention and recruitment decisions.
“However, over the course of the year confidence has steadily increased from an average confidence of 25% in the first three-months of 2023 and ending the year with a three month average of 39% – an indication of the positive trajectory business has seen this year. This provides a healthier position to begin 2024 with, compared to 2023.”
