South West reports confidence fall

By Anita Jaynes on 1 May, 2020
  • Overall confidence for businesses in the South West fell 51 points over the past month to -35%
  • Confidence in companies’ own business prospects was -40%, compared with 16% in March
  • 35% of South West businesses operating at below half capacity, with 67% reporting a negative impact on demand because of Covid-19

Business confidence in the South West, including the Swindon and Wiltshire region, fell 51 points during April to -35 per cent, according to the latest Business Barometer from Lloyds Commercial Banking.

The Business Barometer’s measure of business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects. It questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Businesses across the South West reported lower confidence in their business prospects month-on-month at -40 per cent. When taken alongside their views of the economy overall, this gives a headline confidence reading of -35 per cent.

In an illustration of the impact of Covid-19 on the region, the majority of businesses reported a significant decrease in demand for their goods and services, with 67 per cent seeing demand fall in April compared to 13 per cent who saw it rise.

More than a third of businesses in the region reported operating at below 50 per cent capacity, while 48 per cent were operating above this level. One in six businesses was not operating at all.

Of the 84 per cent of businesses that reported disruption to their supply chain during April, 33 per cent expected the situation to improve within six months, while 8 per cent expected it would take more than 12 months to return to normal.

David Beaumont, Regional Director for the South West at Lloyds Bank Commercial Banking, said, “Businesses in the South West, an area that usually benefits from being one of the country’s tourism hotspots, reported one of the lowest levels of confidence in the UK during April.

“We’re working alongside the regions firms to ensure they have the finance needed to weather current challenges, including £2bn of arrangement-fee-free finances, and capital repayment holidays on loans for those that have been severely affected.”

National overview

Across the UK, overall confidence fell 38 points to -32 per cent. Wales reported the lowest confidence at -52 per cent.

In April, overall business confidence fell across all four sectors. Confidence in the manufacturing sector saw the sharpest decline, falling 46 percentage points to -35 per cent, with the retail sector falling to -33 per cent. The construction sector fell by 34 percentage points to -20 per cent, while services fell 23 points to -22 per cent.

Hann-Ju Ho, Senior Economist for Lloyds Bank Commercial Banking, said, “The results in April demonstrate the full impact of the measures taken by the Government to shut down large parts of the economy to help contain the pandemic, with sentiment now matching the all-time low of December 2008. There are tentative signs that China’s economy is stabilising as it starts to ease lockdown measures, and that may serve as a template for the rest of the world.”