Business confidence in the East of England was among the lowest seen in the UK during August despite rising four points month-on-month to -22%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies reported higher confidence in their business prospects month-on-month at -25%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -22%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during August, but with the picture improving. 68% experienced a fall in demand for their products and services, down seven points on the month before. Meanwhile, 4% experienced an increase in demand, down two points on July.
Some businesses expect to make redundancies following the end of the furlough scheme in October. When asked about job retention among firms with furloughed staff, only 27% expect to bring back more than 90% of their staff.
More than two fifths (41%) of firms surveyed in the region said they weren’t currently using the Job Retention Scheme.
When asked about social distancing measures, three in five (59%) businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although more than a quarter (25%) said they couldn’t operate fully within the rules.
Of the 47% of businesses reporting disruption to their supply chain during August, 35% expected the situation to improve within six months, while 8% expected it would take more than 12 months to return to normal levels.
David Atkinson, regional director for the East of England at Lloyds Bank Commercial Banking, said: “A slight easing of pessimism is a step in the right direction. The improvement has no doubt been supported by the region’s tourism and hospitality businesses being bolstered by VAT cuts and the Eat Out to Help Out scheme.
“But it’s clear that many are still grappling with difficult trading conditions. We remain by the side of local businesses, providing the support they need to plan ahead.”
National overview
Overall UK confidence rose eight points during August to -14%. The South East became the first region to register a positive reading since March, after confidence climbed from -31% in July to 1% this month. The South West and Scotland were least confident in August at -25% and -35% respectively.
All four major industry sectors reported confidence at the highest levels since March. Manufacturing saw the sharpest increase of 14 percentage points to -7%, while construction rose 11 percentage points to -11%. The retail sector rose to -8% and services increased to -18%
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain.
“Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base, which will hopefully continue over the coming months.”
