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East Midlands business confidence suffers but news of vaccine drives hope

East Midlands business confidence suffers but news of vaccine drives hope

Business confidence in the East Midlands fell four points during November to -22%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Lloyds Bank’s Business Barometer for November 2020 shows:

  • Overall confidence of firms in East Midlands fell four points in the past month to -22%
  • Firms’ confidence in their own business prospects was -14% compared with     -11% in October
  • Surge in UK business confidence observed after 9th November announcement that Pfizer and BioNTech vaccine has 90% efficacy against COVID-19

Companies in the East Midlands reported lower confidence in their own business prospects, down three points month-on-month at -14%.  When taken alongside their views of the economy overall, this gives a headline confidence reading of -22%.

When it comes to businesses’ hiring intentions, a net balance of 7% expect to reduce staff levels over the next year, up one point on last month.

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

Vaccine news boosts national confidence

At UK level, the report tracked a dramatic increase in business confidence after the 9th of November announcement that the Pfizer and BioNTech vaccine has 90% efficacy against COVID-19.

Firms surveyed after the announcement between 9th and 16th November had an overall confidence of -15%, which was seven points higher than those polled before, between the 2nd and 8th November (-22%).

For the month as a whole, UK business confidence registered at -21%, down three points on October.

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

“Given the national lockdown measures businesses have faced this month, the drop in confidence here in the East Midlands is unsurprising and follows the general trend we have seen across the country.

“However, December’s Barometer will provide an indication as to how the ongoing development of the COVID-19 exit strategy is affecting companies’ confidence – when firms’ outlook may also be buoyed following the end of national restrictions.

“There will still be challenges ahead, but we will remain by the side of businesses as they prepare to tackle them head on.”

UK regional and sector overview

The North East had the highest confidence in November at -8%, followed by Yorkshire & the Humber (-11%) and Wales (-15%). Meanwhile, optimism fell 10 points in Scotland to -38% making it the least confident of the UK’s nations and regions.

In the industry sectors, confidence declined in manufacturing, construction and retail as stricter lockdown measures were imposed across the UK. Manufacturing confidence fell by 10 points to ‑25%, driven by a sharp fall in optimism about the economy and a smaller decline in trading prospects (chart 3). Construction confidence dropped by 13 points to ‑23%, while retail confidence fell by five points to ‑12%. Services confidence, meanwhile, increased slightly by three points to ‑21%, having already fallen significantly in October.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“The sustained number of coronavirus cases and more restrictive lockdown measures saw overall business confidence fall again this month. Firms across the sectors also continue to remain cautious as they prepare for a new trading relationship with the EU. However, confidence increased following the news of a potential vaccine to help combat the virus. The months ahead will be key for businesses as they navigate the winter months and adapt to the evolving landscape.”

Picture: Lloyds Bank Amanda Dorel

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