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East Midlands business confidence rises to highest point since march 2020

East Midlands business confidence rises to highest point since march 2020

Business confidence in the East Midlands rose 17 points month-on-month to -5% during December, its highest level since the beginning of the pandemic in March, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Lloyds Bank’s Business Barometer for December 2020 shows:

  • Overall confidence of firms in the East Midlands rose 17 points in the past month to -5%
  • Companies in three of 12 UK nations and regions return to net optimistic position for the first time since March
  • Report shows biggest month-on-month improvement in UK business confidence in four years after vaccine rollout begins

East Midlands firms’ optimism towards the economy improved 33 points month-on-month to 3%, with confidence in their own business prospects rising two points on November’s reading to -12%.  Together, this gives a headline confidence reading of -5%.

Businesses’ hiring intentions showed that a net balance of 10% of businesses in the region expect to reduce staff levels over the next year, up three points on last month.

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

Across the UK, overall confidence saw its largest monthly increase for more than four years in December, following vaccine progression announcements. Confidence climbed by seventeen points to -4% in November. Economic optimism jumped 23 points to -5%, while firms’ confidence about their trading prospects increased 11 points to -3%.

All 12 UK nations and regions saw a rise in overall confidence during December. The most marked improvements were reported in Scotland (up twenty-nine points to -9%); the South West (up twenty-two points to 5%) and the West Midlands (up twenty-two points to 4%). The North East, South West and West Midlands all moved into net positive territory for the first time since March this year.

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

“It’s encouraging to see such a significant improvement in confidence from East Midlands’ businesses for the end of the year. Clearly, the beginnings of a vaccine rollout has given firms hope that a return to normality could be on the horizon.

“But challenges remain as we step into the new year, with businesses facing uncertainty over changes to local restrictions, and a new trading relationship with the EU to navigate. As ever, we will be by the side of businesses and help them overcome any headwinds.”

Sector overview

In the industry sectors, confidence reached the highest levels seen since the start of the pandemic. Manufacturing reported a strong rebound this month despite looming uncertainty during the survey period about the UK’s new trading arrangements with the EU, surging by twenty-five points, from -25% to 0%. This was followed by a growth in confidence for construction, which rose by eighteen points to -5%; services, which jumped by sixteen points to -5% and the retail sector which reported an eleven point lift in confidence to -1%. Nevertheless, entering the holiday trading period, confidence in retail, as in other sectors, remains below the long-term average.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU. While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”

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