South East business confidence improves but ‘remains in the red’

News Posted 30/11/22
Business confidence in the South East rose two points during November to -9%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

For November, the Business Barometer, which questions 1,200 businesses monthly to provide early signals about UK economic trends, was conducted between 1 and 15 November, before the Chancellor’s Autumn Statement announcement on 17 November.

Companies in the region reported lower confidence in their own business prospects month-on-month, down four points at 9%. When taken alongside their optimism in the economy, up four points to -29%, this gives a headline confidence reading of -9%.

South East businesses identified their top target areas for growth in the next six months as evolving their offering (35%), investing in their teams (28%), diversifying into new markets (15%), and investing in sustainability (15%).

A net balance of 8% of South East businesses expect to increase staff levels over the next year, up seven points on last month.

Overall UK business confidence fell five points during November, but remained positive at 10%. Firms’ outlook on their future trading prospects was down two points to 25%, and their optimism in the wider economy dropped four points to -2%.

Despite a seven-point dip, UK businesses remained positive about hiring intentions with 14% of firms aiming to create new jobs in the next 12 months.

All UK regions and nations, apart from the South East, reported a positive confidence reading in November, with seven recording a month-on-month increase in confidence.

Of those recording an increase in confidence, Scotland (up 19 points to 24%), Wales (up 12 points to 17%) and the South West (up nine points to 5%) saw the largest monthly changes, with Scotland now the most optimistic overall.

Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “It’s clear that the recent period of economic uncertainty and continued inflationary pressures has impacted businesses in the South East, but the small rise in confidence in November is cause for cautious optimism.

“Christmas typically represents a boon time for the region’s businesses, and the addition of the World Cup will further add to hospitality firms’ fortunes as they approach the end of the year.

“Successfully seizing on this opportunity will rely on businesses closely monitoring stock levels and keeping cash flow moving to ensure they can make the most of this busy period. We’ll continue to remain by the side of businesses as they prepare for the year ahead.”

Business confidence in retail increased to 15% (up from 9%), perhaps reflecting a renewed confidence in trading prospects ahead of the festive season. However, business confidence in the manufacturing sector fell for the sixth month in a row, to 4%, down 9 points, the lowest confidence level since early 2021.

The construction sector held gains made in October, remaining unchanged at 20%, although this level still remains weaker than in the first half of the year.

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