Business in Britain report reports confidence in decline

Business confidence in the North West is low, according to a recent Business in Britain report from Lloyds Bank. 

Businesses confidence has declined in the North West as firms respond to recent economic and political shocks. North West firms cite economic uncertainty and weaker UK demand as the biggest threats in the next six months.

Exporters in the region remain positive and expect to continue growing overseas sales – although confidence has fallen since January 2016. 

Business confidence in the North West has fallen/ with economic uncertainty and UK demand being seen as the biggest threats to businesses’ fortunes, according to the latest Business in Britain report from Lloyds Bank.
 
The Business in Britain report, now in its 24th year, gathers the views of more than 1,500 UK companies, predominantly small to medium sized businesses, and tracks the overall “balance” of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
 
The report’s confidence index – an average of respondents’ expected sales, orders and profits over the next six months – has declined 26 points to 14 per cent in North West since the previous survey in January 2016.
 
Economic uncertainty poses greatest risk
 
The most commonly identified threat chosen by companies in the North West over the next six months was economic uncertainty, which was cited by nearly three in ten firms (27 per cent), closely followed by  weaker UK demand, which was mentioned by a quarter (25 per cent).
 
This compares with the last Business in Britain survey which saw weaker UK demand identified by more than third (35 per cent) as the biggest threat to companies, followed by weaker overseas demand, which was highlighted by 15 per cent of North West exporters at the start of the year.
 
International trade  

The net balance of North West exporters expecting an increase in total exports across the globe fell by 15 points to 28 per cent, reflecting large decreases in firm’s confidence around exporting to Europe and Africa compared with January’s report.

Exporters’ desire to continue selling to the US and Canada fell only slightly suffering just a two point decrease, due to by a larger fall in the value of sterling against the dollar than when compared with the Euro.

Martyn Kendrick, regional director for SME Banking in the North West, at Lloyds Bank Commercial Banking, said: “Business confidence in the North West has taken a hit since January but this should be viewed in the context of the recent economic and political shocks.

“The EU referendum vote has introduced a level of uncertainty for companies across the region as the UK decides on the best model for its future relationship with the EU, and this is likely to continue in the short term

“This is reflected in the dramatic fall in the number of North West firms looking to increase trade with Europe over the next six months, with a big shift towards Latin American markets.”

REGIONAL PICTURE

Confidence falls across all regions but not in Wales

The latest survey shows a marked divergence in confidence across the UK. While all English regions and Scotland have seen a large decline in confidence since the start of the year, Wales bucked the trend and reported an improvement. The data also shows that confidence levels were below the national average in the south of England and Scotland, but above average in Wales, the Midlands and the North of England.

The differences in sentiment may have been partly driven by the reaction to the outcome of the EU referendum result, with confidence levels the lowest in London and Scotland which voted for ‘Remain’.

NATIONAL SECTOR PICTURE

Service sectors worst hit

Business confidence fell in every sector. The sectors that were the most badly hit were the service sectors which declined on average by 30 points including retail and wholesale, hospitality & leisure, and business & other services.

Sentiment also fell in construction, although the level remains relatively high. In all sectors, confidence remains positive, which indicates that growth may slow down gradually rather than go into a rapid decline.