Member Article

North East business confidence improves as vaccine drives hope

Lloyds Bank’s Business Barometer for November 2020 shows:

• Overall confidence of firms in the North East rose two points in the past month to -8%, making it the least pessimistic region in the UK
• However, firms’ confidence in their own business prospects was -3%, compared with 1% in October
• Surge in UK business confidence observed after 9th November announcement that Pfizer and BioNTech vaccine has 90% efficacy against COVID-19
• Business confidence in the North East rose two points during November to -8%, making it the most confident region in the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Optimism towards the economy increased 11 points month-on-month to -11%. However, companies in the North East reported lower confidence in their own business prospects at -3%, compared to 1% in October. Together, this gives a headline confidence reading of -8%.

When it comes to businesses’ hiring intentions, a net balance of 4% expect to reduce staff levels over the next year, down 14 points on last month.

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

Vaccine news boosts national confidence

At UK level, the report tracked a dramatic increase in business confidence after the 9th of November announcement that the Pfizer and BioNTech vaccine has 90% efficacy against COVID-19.

Firms surveyed after the announcement between 9th and 16th November had an overall confidence of -15%, which was seven points higher than those polled before, between the 2nd and 8th November (-22%).

For the month as a whole, UK business confidence registered at -21%, down three points on October.

Steve Harris, regional director for the North East at Lloyds Bank Commercial Banking, said: “The North East is once again the least pessimistic region in the UK. It’s encouraging to see overall confidence edging higher in the region, with hiring intentions improving, against a backdrop of national lockdown restrictions.

“The Business Barometer has already tracked an uplift in sentiment following promising announcements from vaccine developers. December’s report will be telling as to how subsequent vaccine news has influenced firms’ outlook.

“We’re working closely with clients to help them navigate the challenges ahead and will be by their side in the months to come.”

UK regional and sector overview

The North East had the highest confidence in November at -8%, followed by Yorkshire & the Humber (-11%) and Wales (-18%). Meanwhile, optimism fell 10 points in Scotland to -38% making it the least confident of the UK’s nations and regions.

In the industry sectors, confidence declined in manufacturing, construction and retail as stricter lockdown measures were imposed across the UK. Manufacturing confidence fell by 10 points to 25%, driven by a sharp fall in optimism about the economy and a smaller decline in trading prospects. Construction confidence dropped by 13 points to 23%, while retail confidence fell by five points to 12%. Services confidence, meanwhile, increased slightly by three points to 21%, having already fallen significantly in October.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The sustained number of coronavirus cases and more restrictive lockdown measures saw overall business confidence fall again this month. Firms across the sectors also continue to remain cautious as they prepare for a new trading relationship with the EU. However, confidence increased following the news of a potential vaccine to help combat the virus. The months ahead will be key for businesses as they navigate the winter months and adapt to the evolving landscape.”

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