Member Article

North East business confidence falls amid ongoing uncertainty

Lloyds Bank’s Business Barometer for October 2020 shows:

• Overall confidence of firms in the North East fell five points in the past month to -10%
• Firms’ confidence in their own business prospects was 1% compared with -2% in September

Business confidence in the North East fell five points during October to -10%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North East reported more confidence in their own business prospects month-on-month at 1%. When taken alongside their optimism in the economy overall, which stood at -22%, this gives a headline confidence reading of -10%.

When it comes to businesses’ hiring intentions, a net balance of 18% expect to reduce staff levels over the next year, up five points on last month.

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

Across the UK, overall confidence dropped seven points month-on-month to -18%. While confidence about businesses’ own trading prospects dipped by only one point, their optimism in the economy fell by 14 points. UK business confidence has remained in negative territory since April, but the picture had been improving until October, with confidence steadily rising since May.

Steve Harris, regional director for the North East at Lloyds Bank Commercial Banking, said: “While the North East remains one of the least pessimistic regions in the UK, it’s clear that growing uncertainty over new restrictions and challenging economic conditions are taking their toll. Concerns over a potential tier-three local lockdown in the run up to Christmas will have dampened the outlook of businesses still trying to get back on their feet.

“We remain by the side of businesses across the region as they plan ahead and navigate what looks set to be an unprecedented final quarter.”

National overview

Nationally, the North West reported the highest confidence in October at -2%, followed by the East of England (-8%), and North East (-10%). Meanwhile, optimism fell 21 points in Yorkshire to -29%, making it the least confident UK region.

In the industry sectors, Services slipped back, with confidence declining by fourteen percentage points to -24%. The decline was driven by hospitality and arts and leisure grappling with the implications of recently introduced measures to tackle the pandemic. Manufacturing and Retail logged modest improvements, up three points to -15% and up one point to -7% respectively.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The resurgence in coronavirus cases and the reintroduction of local lockdown measures saw overall business confidence fall back sharply this month. Added to that are ongoing uncertainties regarding new trading arrangements with the EU in January. All of this makes the economic outlook uncertain and the period ahead will be pivotal for businesses as they navigate the winter months and continue to adapt to the evolving landscape.”

This was posted in Bdaily's Members' News section by Charlotte FitzGerald .