Business optimism hits year-long high

Business confidence in all regions of the UK has surged to its highest level since the Covid-19 outbreak was declared a pandemic a year ago, according to the latest 'Business Barometer' from Lloyds Bank Commercial Banking.

David Sapsted

31 March 2021

Overall, UK firms’ economic optimism in March increased by 15 points to 17 per cent, while confidence in their own business prospects jumped 10 points to 12 per cent. The readings were the highest since February 2020.Every UK region and nation reported an increase in overall confidence during the month, with most reporting double-digit rises since February in the survey of more than 1,200 companies across the nation.The biggest jumps were reported in NE England (up from one per cent to 26 per cent), the West Midlands (3 per cent to 27 per cent) and the East of England (-8 per cent to 12 per cent). Scotland was the only area to remain in net negative territory despite an increase in confidence, with a reading of -2 per cent.Highest confidence levels of 25 per cent were found in the manufacturing and retail sectors, while the readings in services and construction rose to 11 per cent and 12 per cent respectively.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “It’s been a year since the first lockdown and the surge in confidence this month tells us firms are increasingly confident about economic recovery.“The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures. It will be interesting to see whether the momentum for stronger business optimism is sustained in the months ahead.”Business confidence in London stood at 12 per cent - also the highest reading in a year - with companies' optimism in their own prospects rising by 10 points to 14 per cent.A net balance of 9 per cent of firms in the capital said they expected to increase staff levels over the next year, up 12 points on February. Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said: “After a year of restrictions, the pace of the vaccine rollout and imminent easing of lockdown is evidently having a positive impact on the outlook of London businesses. The city’s world-renowned hospitality sector, in particular, will be looking forward to reopening its doors next month.“Job creation is back on the agenda for many firms, and this is another sign of a more confident business community, although naturally some uncertainty remains. Whatever lies ahead, we’ll be by the side of businesses across the capital to help them emerge from the pandemic in as strong a position as possible.”Meanwhile, the latest 'Growth Indicator' survey from the Confederation of British Industry (CBI) revealed that expectations for growth over the coming quarter stood at their highest level since 2018, led by optimism among business and professional services firms, and manufacturing companies.Alpesh Paleja, CBI lead economist, said: “After a torrid year, our latest surveys show some light at the end of the tunnel – with the decline in activity across sectors slowing, and expectations of a rebound in growth over the next three months."