Buoyant South West firms shrug off the economic gloom to enter 2023 on a confident note

January 6, 2023

Confidence among South West businesses continued to rise in December after a surprise recovery the previous month – with firms ending the year in a rare upbeat mood.

The latest monthly Business Barometer from Lloyds Bank Commercial Banking reveals firms reported higher confidence in their own business prospects month-on-month, up 15 percentage points at 34%. 

Taken alongside their optimism in the economy, up 10 points to 1%, this gives a headline confidence reading of 17% -the highest since August.

Businesses in the region identified their top target areas for growth over the next six months as evolving their product or service offering (32%), investing in their teams (29%) and spending on sustainability (29%).

A net balance of 13% of firms in the South West expect to increase staff levels over the next year, up two points on last month.

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

Confidence levels among South West firms about their prospects and those of the UK economy unexpectedly increased in November despite the economy officially falling into recession.

The continuation of the upbeat mood into December made the South West the third most confident part of the UK, behind the North West and North East. 

All UK regions and nations reported a positive confidence reading in December, for the first time since July.

Overall UK business confidence rose seven points during December to 17%.

The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8%, while their outlook on their own future trading prospects increased by two points to 27%.

Businesses also remained optimistic about job creation, with 16% of firms planning to hire more staff in the next 12 months – up two points on November.

Lloyds Bank Commercial Banking South West director Amanda Dorel, pictured above, said it was encouraging to see firms’ confidence reach the highest levels since the summer as the new year started.

“Of course, challenges such as rising inflation and supply chain problems persist, but the fact that the region’s businesses are continuing to target growth shows their resilience and ambition for the coming year,” she added.

“Many businesses are putting plans around sustainability into place, and those looking to make green improvements should consider green financing which can offer more favourable lending rates.”

The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13%. Confidence in construction and services also increased by nine points to 29% and 18% respectively.

However, retail confidence fell slightly, by two points to 13%. 

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