Businesses in the North of England remained comparatively optimistic in August, faced with a national decline in confidence of 16 per cent, reports August’s Lloyds Bank Business Barometer.
Confidence increased in the North West (to 44 per cent, up 26 points), and Yorkshire and the Humber (to 23 per cent, up nine points) and remained unchanged in the North East at 31 per cent.
This came in spite of a national fall in confidence for the third consecutive month in August, declining nine points to 16 per cent, well below the national long-term average of 28 per cent and the lowest level since March 2021 when the economy emerged from the second COVID-19 wave. The biggest drop was seen in the East of England, where confidence fell 44 points to just two per cent.
Nationally, inflation continued to outweigh concerns about an economic slowdown. Over 70 per cent of businesses (up from 54 per cent last month) said that the impact of inflation was one of their biggest concerns, particularly in relation to raw materials and energy costs, while 40 per cent were concerned about slower UK and global growth.
Business confidence declined nationally across all key sectors for the month. Confidence within retail declined the most (13 per cent, down 18 points), with the service sector also seeing a significant nine-point decrease (15 per cent). Other sectors saw moderate decreases, with manufacturing down by four points (16 per cent) and construction (26 per cent, minus two points).
Even in the North West, the nation’s most optimistic region currently, companies reported lower confidence in their own business prospects month-on-month, down 39 points at three per cent, though this was mitigated by rising optimism in the overall economy, up 33 points to 38 per cent.
Paul Gordon, MD for SME and mid-corporates, Lloyds Bank Business & Commercial Banking, said: “We know that rising costs are already dealing a heavy blow to businesses, but remaining agile to the changing economic environment will be vital for businesses in the months ahead. Firms must keep a tight watch on costs and structure their finances wisely, so they are in the best position possible. Businesses should try to remain flexible, and use the capital and cashflow available to them.”
