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East Midlands business confidence falls from February’s high

Business confidence in the East Midlands fell 18 points during February to 24 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the East Midlands report lower confidence in their business prospects at 26 per cent and lower economic optimism at 22 per cent. Together, this gives an overall confidence of 24 per cent, compared with last month’s figure of 42 per cent.

Companies’ hiring intentions showed that a net balance of 21 per cent of businesses in the region expect to hire more staff during the next year, down eight points on last month.

Nationally, overall confidence fell one point to 32 per cent, driven by a dip in firms’ economic optimism.

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

Dene Jones, regional director for the Midlands at Lloyds Bank Commercial Banking, said: “With car manufacturers seeking to increase investment in Derbyshire, a boost for the entire supply chain across the region was expected. However, we didn’t see this positive move lead to a boost in businesses’ confidence.

“In fact, the fall shows just how fragile firms’ confidence remains amid ongoing uncertainty. While fewer firms now expect to hire more staff this year, the fact remains that most businesses are still planning to do so, which suggests they are still cautiously planning to invest in growth while awaiting any clarity that comes from the current EU negotiations.”

Across the region, a net balance of five per cent of businesses said they felt that the UK’s exit from the European Union was having a positive impact on their expectations for business activity, up three points on a month ago.

Overall confidence in March was strongest in the transport and manufacturing sectors, at 55 per cent and 49 per cent respectively. In contrast, it was weakest in wholesale (11 per cent) and hospitality and leisure (18 per cent).

Hann-Ju Ho, Senior Economist for Lloyds Bank Commercial Banking, said: “While firms’ confidence in their business prospects improved slightly in March, overall business confidence was held back by a fall in economic optimism.

“Recent progress on the Brexit negotiations has reduced uncertainty, which could continue to support business confidence going forward. The risk of rising global protectionism, however, is a growing concern.”

Source: East Midlands Business Link

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