The easing of Covid restrictions and the prospect of another staycation summer is giving South West businesses a major confidence boost, a new report says.
The latest Lloyds Bank’s Business Barometer, for February 2022, shows business confidence in the South West rose by nine points during February to 46%.
It was the second consecutive month that confidence levels have risen and it was matched by a rise in the number of South West businesses expecting to create jobs.
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A net balance of 39% of businesses in the region expect to take on workers in the next year, up 10 points on last month..
However, companies in the South West reported lower confidence in their own business prospects month-on-month, down two points at 40%. But when taken alongside their optimism in the economy, up 18 points to 51%, this gives a headline confidence reading of 46%.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “The outlook of South West firms continues to go from strength to strength, which is testament to our region’s robust and diverse economy.
“With another year of holidays closer to home on the cards for many families across the UK, our world-class tourism and hospitality industries in particular will be optimistic about a bright trading period in the months ahead. We will remain by the side of businesses as they continue to accelerate their post-pandemic growth plans.”
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
This month’s survey captured responses between February 1 and 15 before the removal of various Covid restrictions across the UK’s nations.
But the further easing of Covid restrictions in January had already had a positive impact across various sectors nationally and regionally with strong increases in manufacturing (up 11 points to 54%) and construction (up 18 points to 51%), and both reaching their highest level since the start of the pandemic.
Retail confidence rose three points to 47%, another high since the start of Covid. Services remained unchanged at 38%.
Overall UK business confidence saw an uptick in February, rising five points from January’s reading of 39% to 44% – its highest level since September 2021.
Firms remained positive about their future trading prospects, with a four-point increase month-on-month to 45%, while optimism in the economy overall also increased by five points to 43%. The net balance of businesses planning to create new jobs rose by nine points to 38%.
Every UK nation and region maintained a positive overall confidence reading in February. Alongside the South West, the North East (up 17 points to 57%) and West Midlands (up eight points to 47%) saw the biggest increases month-on-month, with the North East reporting the highest levels of business confidence overall. Only the North West (which remained unchanged at 44%) and Scotland (down two points to 35%) did not have higher confidence readings than last month.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “It’s extremely encouraging to see such an improvement in business confidence reaching its highest level since September, fuelled by trading prospects reaching their highest level since the start of pandemic. With hiring intentions also reaching their highest level since the end of the furlough scheme there is hope that the easing of supply bottlenecks will alleviate a number of challenges that businesses have been facing and help underpin the UK’s growth in 2022.”
