– Business confidence in the East Midlands fell 17 points to 35% in March
– Firms’ optimism in their own trading prospects fell 15 points to 37%, while optimism in the economy dipped 19 points to 33%
– Overall UK confidence held steady at 42% in March – the same as in February

Business confidence in the East Midlands fell 17 points during March to 35%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the East Midlands reported lower confidence in their own business prospects month-on-month, down 15 points at 37%. When taken alongside their optimism in the economy, down 19 points to 33%, this gives a headline confidence reading of 35% (vs. 52% in February).

Businesses in the East Midlands identified their top target areas for growth in the next six months as evolving their offering, for example by introducing new products or services (48%), investing in their team, for example by hiring new staff or investing in training (37%), and entering new markets, for example by diversifying into adjacent markets or exporting to new ones (36%).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).

Yorkshire and the Humber was the most confident UK nation or region in March (60%), followed by the North East (56%) and London (52%).

Sector Insights

Services confidence fell 5 points to 40%, the first decline since December. That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.

The gains in manufacturing (up 1 point to 41%) and construction (up 2 points to 40%) were relatively modest and confidence remained below levels seen at the start of 2024. Firms in the retail sector reported improved confidence (up 5 points to 45%), which was the strongest result for over two years.

Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “While it might be discouraging to see a drop in business confidence in the region this month, a pickup in businesses looking to evolve their offering since last month points to an increasing focus on diversification as a route for growth.

“As an upcoming devolution deal will deliver £38m per year for the newly formed East Midlands Combined County Authority, regional businesses can look forward to fresh development opportunities. We’ll continue to be by the side of local firms as they prepare to capitalise on all opportunities ahead.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With businesses reporting 42% confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices.

“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months. It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms.

“Among the regions there was a mixed picture. Following unusually low confidence in February, London bounced back with a 14-point increase to bring the capital back in line with typical figures reported for the area, although the greatest confidence was shown by businesses in Yorkshire & the Humber who reported a 29-point rise, making it the most confident region overall. However, businesses in the Midlands saw a significant fall which seems to be an outlier compared to recent results.

“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”