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East Midlands business confidence takes hit after marginal gains over summer

East Midlands business confidence takes hit after marginal gains over summer

Business confidence in the East Midlands fell for the first time since May during October, decreasing by 14 points to -18%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the East Midlands reported slightly higher confidence in their own business prospects month-on-month at -11%, up two points on September. However, when taken alongside their views of the economy overall, which fell 30 percentage points, this gives a headline confidence reading of -18%.

When it comes to businesses’ hiring intentions, a net balance of 6% expect to reduce staff levels over the next year, an improvement on last month when a net balance of 11% were planning to cut jobs.

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

The picture in the East Midlands closely reflects that of the UK as a whole during October, when overall UK confidence dropped seven points month-on-month to -18%. While confidence about businesses’ own trading prospects dipped by only one point, their optimism in the economy fell by 14 points. UK business confidence has remained in negative territory since April, but the picture had been improving until October, with confidence steadily rising since May.

Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: 

“The East Midlands had enjoyed small but steady confidence growth for a number of months prior to this, and while it is disappointing to see confidence fall, it’s very likely to have come in reaction to the stricter measures introduced across the region during late September and early October.

“Businesses have shown great resilience throughout this pandemic and we will remain by their side to support them through this period of great challenge.”

National overview

The North West had the highest confidence in October at -2%, followed by the East of England (-8%), and North East (-10%). Meanwhile, optimism fell 21 points in Yorkshire to -29%, making it the least confident UK region.

In the industry sectors, services slipped back, with confidence declining by fourteen points to -24%. The decline was driven by hospitality and arts and leisure grappling with the implications of recently introduced measures to tackle the pandemic. Manufacturing and retail logged modest improvements, up three points to -15% and up one point to -7% respectively.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:

“The resurgence in coronavirus cases and the reintroduction of local lockdown measures saw overall business confidence fall back sharply this month. Added to that are ongoing uncertainties regarding new trading arrangements with the EU in January. All of this makes the economic outlook uncertain and the period ahead will be pivotal for businesses as they navigate the winter months and continue to adapt to the evolving landscape.”

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