Business confidence slips in SW

Business confidence in South West has slipped in the last six months, partly due to renewed concerns on global growth, according to the latest Business in Britain report from Lloyds Bank.

The twice-yearly report, now in its 23rd year, gathers the views of more than 1,500 UK 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.

Since the last report in July 2014, the Business in Britain report’s key confidence index has decreased by 15 points to 43 per cent. This was largely driven by a decrease in firms’ expectations of profits and orders over the next six months – reflecting a more cautious outlook for continued economic growth in 2015.

David Beaumont, Area Director for SME Banking in South West, Lloyds Bank Commercial Banking, said: “Although business confidence has slipped back, it is important to remember that the UK recovery remains on track. South West companies should continue to think about their priorities and how they can best grow their businesses as we start the New Year.”

Expectations for total sales, orders and profits in the next six months - the three key indicators of business confidence - have all dropped but remain above their long-term average.

Over half of businesses in the South West (52 per cent) said that they expect their orders to increase during the first half of the year, while less than one in twenty (four per cent) that anticipate a decline. The resulting 48 per cent overall net balance represents a thirteen point decrease from July 2014.

Similarly, 54 per cent of businesses stated that they think their sales will increase in the next six months, while just over a tenth (11 per cent) expect a drop, leading to a 43 per cent overall balance, a 22 point decrease from the middle of the year.

This decline in optimism for sales and orders has taken its toll on expectations for profits. After rising in recent surveys, the net balance of firms expecting profits to rise dropped by 10 points to 37 per cent. More than half of businesses (52 per cent) expect their profits to increase in the next six months while 15 per cent think they will fall.

Despite indices falling back from the previous survey, these figures taken together indicate that economic growth will continue at a moderate pace in the first half of 2015.