Business confidence in the East Midlands fell two points to 23% in June, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the East Midlands reported higher confidence in their own business prospects month-on-month, up seven points at 27%. When taken alongside their optimism in the economy, down 11 points to 19%, this gives a headline confidence reading of 23%.
East Midlands businesses flagged a range of growth opportunities for the next six months, including evolving their offering with a new product or service (44%), investing in the growth and development of their team (37%) and making their operations more sustainable (28%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 16% of businesses in the region expect to increase staffing levels over the next year, up one point on last month.
Across the UK, business confidence fell 10 points during June to 28%. Firms’ optimism in the economy dropped 12 points to 21%, while their outlook on future trading prospects was down eight points, at 34%. The net balance of businesses planning to create new jobs also decreased, by nine points, to 28%.
Every UK region and nation reported positive confidence readings in June. However, all except the East of England (up 17 points to 31%) recorded a lower reading than last month. London (down 28 points to 35%), the West Midlands (down 23 points to 30%) and Scotland (down 15 points to 27%) reported the largest decreases month-on-month, with the North West (down two points to 42%) now the most optimistic region overall.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “Despite the challenges businesses face, confidence across the East Midlands remains robust and the outlook positive. Firms are looking to innovate, develop skills, and make their operations more sustainable, highlighting their confidence to invest in mid-to-long-term growth opportunities.
“Businesses should explore different support options as they pursue these new growth opportunities. For example, the focus on sustainability has grown since last month and I expect this trend will continue as we head towards our Net Zero goals. Using tools like our Clean Growth Finance Initiative could help businesses introduce more energy-efficient measures and create a more sustainable way of operating. We’ll be by the side of businesses across the region as they explore these options and look forward to a more positive future.”
Confidence among businesses in the manufacturing and construction sectors fell, bringing them close to the UK all-sector average, at 32% and 30% respectively, reflecting lower optimism in the economy. Service sector confidence declined to its lowest in a year, at 25%, showing weaknesses in hospitality, though offset by stronger confidence in business services. Confidence in retail businesses edged up this month four points from 27% to 31%.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that the momentum for growth is moderating. Firms remain broadly positive but face several challenges ahead, including concerns around higher costs and slowing demand. If these trends continue, businesses may have less scope to pass on higher costs to support their margins.”
