Business confidence in the East Midlands fell 24 points during March to 3%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
The research, taken between the 2nd and 16th March, showed that companies in the region had lower confidence in their business prospects at 4% and lower optimism about the economy at 2%. Together, this gives an overall confidence of 3%.
Across the UK, overall business confidence fell by 17 percentage points to 6% in March, the lowest level since October 2019. However, the report showed that nationally, for the second week of the survey, a much sharper fall in overall confidence was recorded at -3%.
It matches the lowest dip seen by the barometer since December 2011 and is otherwise the lowest dip since March 2009 during the global financial crisis.
Responding specifically to the impact of the Coronavirus, 68% of East Midlands businesses stated that they had already been affected or expected to be impacted, ahead of Boris Johnson’s initial call for the public to stay at home on March 16th.
The data illustrates the impact that the outbreak was having on business confidence before many initiatives launched by the Government to help combat the virus were announced.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “This research shows that the virus was already beginning to affect East Midlands’ businesses before the social distancing measures were announced by the Government, with nearly two thirds of businesses in the region saying that they’d already been or expected to be impacted by the outbreak.
“It is unsurprising that sentiment around the economy and firms’ business prospects in the East Midlands have dropped so significantly during the last month, and we can expect an even more subdued picture in the region this month as tough trading conditions weigh on businesses’ outlook.
“Against this backdrop, we are here to help our customers through interruptions they may face and as part of our anticipated £18bn of support for businesses this year, we’ve set aside £2bn of arrangement fee free finance to help small firms affected by COVID-19.
“This funding is designed to help businesses manage their cashflow, which might have been affected by supply chain interruptions or employee absences. We’re also advising firms on how they can access the Coronavirus Business Interruption Loan Scheme (CBILS). We remain committed to supporting our customers in the weeks and months ahead in any way we can.”
Businesses in the North East had the highest confidence at 23%, ahead of the South West at 16%, and London at 12%.
Those in the South East were the least confident, with an overall confidence of -10%, 16 points below the national average.
In March, overall business confidence fell across all four sectors surveyed. Confidence in the retail sector saw the sharpest decline, falling 21 percentage points to 9%. The manufacturing sector also saw a big decline from 31% to 11%, services was down 18 points to 1%, while the construction sector fell by 15 points to 14%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The results in March demonstrate the impact of the shutdown of large swathes of the economy to combat the pandemic even in advance of the Government’s stringent measures announced in recent days. Sentiment has returned to historic low levels after improving in recent months. We will continue to monitor what businesses are telling us, and hope that they can take steps to minimise the impact of current economic downturn.”