Business confidence has risen sharply in the South West as the region’s firms shrug off suggestions that UK economic growth is stalling.
According to the latest Business Barometer from banking group Lloyds, optimism among South West companies climbed by 13 percentage points in January.
Confidence in their own business prospects was up 20 points at 57% – higher than the national average – while optimism in the economy rose by six points to 20%.
While this is lower than the 24% figure for the UK as a whole, it marked a strong bounce back on December’s 11% and was in contrast to the picture nationally, which registered a seven-point fall in confidence.
Looking ahead to the next six months, South West firms identified their top target areas for growth as evolving their offering – for example by introducing new products or services (45%) – entering new markets (37%) and investing in their team, such as through training (34%).
A net balance of 25% of businesses in the region also expect to increase staff levels over the next year, up 10 points on last month.
The upbeat outlook expressed by the region’s firms is in marked contrast to those from a number of economic commentators and business groups which have painted the UK as teetering on the brink or recession – and pinning the blame on measures in last October’s Budget.
Lloyds South West director Amanda Dorel, pictured, said: “It’s great to see South West business confidence rebound as we kick off the year – with local sentiment now sitting above the UK average for the first time since June 2024.
“As local firms capitalise on this outlook, we’ll continue to be on their side, offering them the support they need to realise their ambitions and drive fresh growth, whether that’s by launching new products and services or upskilling their team.”
Lloyds Commercial Banking senior economist Hann-Ju Ho said the South West was one of seven regions reporting higher confidence – a cause for optimism and the first time since July there has been more confidence rises than falls regionally.
“The figures for trading prospects show promise with businesses signalling more resilience and assurance in their ability to weather perceived economic headwinds,” he added.
While confidence in service sector increased by 3 points to 38% nationally, there were falls in manufacturing (down 4 points to 38%), construction, (down 5 points to 36%) and retail (down 3 points to 40%).
Within the services sector, confidence has notably fallen in hospitality but has remained more stable in business services and health-related services.
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.