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Summary
- Lloyds Bank Business Barometer increased by 13 percentage points to 15 per cent.
- The survey shows the biggest increase in overall confidence in the Manufacturing and Retail sectors.
- Of the 12 UK regions, 11 showed a rise in business confidence.
The mass vaccination drive in the UK and the government’s roadmap out of lockdown have led to a surge in confidence among the businesses. As per the Lloyds Bank Business Barometer, the Business confidence in the UK witnessed a sharp increase of 13 percentage points, taking it to 15 per cent, the highest level since the start of the pandemic in March 2020.
The survey, which was conducted between 1 March and 15 March, has shown the biggest increase in overall confidence in the Manufacturing and Retail sectors. Besides, the Services sector for the first time since February 2020 entered the positive terrain at 3 per cent.
As per the report, the increase in overall confidence depicts the firms’ optimism about the wider economy and the hopes of gains in trading prospects. The report highlighted that the net balance of firms reporting stronger optimism about the economy increased by 15 points to 17 per cent.
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Hiring and pricing
The survey also pointed that since the outbreak of Covid-19, for the first time, the net balance for staffing levels was in positive, showing an improvement of 8 points to 4 per cent. The number shows that more companies are looking at hiring, while a few are looking at staff reduction, which got major support from the extension of the furlough scheme. Also, there was an indication that now the wage freeze would come to an end, even though there was little sign of significant pay rises.
The Lloyds Bank Business Barometer is a monthly survey of UK businesses, it helps in gauging the performance and economic expectations and the overall business confidence calculated by averaging the views of 1,200 companies. Reflecting the improvement in business confidence, survey responses showed that firms’ pricing intentions for the next year continue to rise. There was an increase of 3 points to 31 per cent in the net balance of firms expecting to raise prices for their goods and services, a level almost a year ago before the pandemic.
Improvement on all quarters
In region-wise numbers, a strong improvement in the confidence was seen with 11 of the 12 UK regions and nations showing a rise in business confidence. While in England, confidence was in positive zone across all regions. The strongest performance was in the West Midlands, which stood at 27 per cent, while the North East and the North West stood at 26 per cent, followed by East Midlands at 20 per cent.
Commenting on the development, Hann-Ju Ho, Senior Economist of Lloyds Bank Commercial Banking, said that a year after the first lockdown, the increase in confidence shows that businesses are getting confident about the economic recovery. Besides vaccine rollout, the government’s support has played a major role in the heightened confidence. In the coming months, business optimism would be keenly watched to see if the momentum is sustained.
