Business Confidence Remains Steady

The latest Business Barometer from Lloyds Bank Commercial Banking has revealed that business confidence – an average of business prospects and economic optimism - in February has slightly decreased from 35% to 33%. However, this remains above the long-term average of 32%. 

Overall confidence in the first two months of the year is higher than in Q4 2017 and is driven by a rise in economic optimism. However, firms’ confidence in their own business prospects dipped further this month from 39% to 35% and remains below the long-term average of 44%.

The rise in economic optimism since December - which has been maintained this month - seems to be related, in part, to improved sentiment regarding firms’ assessment of the impact following the UK-EU agreement on the first stage of negotiations in December. Companies are evenly balanced on the impact of Brexit, which contrasts with the final quarter of last year when there was a negative net balance of -11%.

“Businesses do seem to be confident in the economic outlook despite current uncertainty, and this is good news,” commented Gareth Oakley, managing director, SME, Commercial Banking. “However, there’s no escaping the fact that firms are less upbeat about their own prospects. This lack of optimism might cause some businesses to reflect on investment plans, but it is vital that they do not let anything get in the way of opportunities for future growth.”

London (50%) maintained its high level of business confidence, followed by the East Midlands (42%) and the North East (42%). There was significant improvement in Scotland, which rose from 18% to 35%, slightly above the UK average of 33%. Confidence in the West Midlands, however, fell back from last month’s strong reading of 45% to 30%.

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