North West Business Confidence Suffers But News Of Vaccine Offers Hope

Business confidence in the North West fell 26 points during November to -28%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North West reported lower confidence in their own business prospects month-on-month at -26%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -28%.

When it comes to businesses’ hiring intentions, a net balance of 29% expect to reduce staff levels over the next year, up four points on last month.

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

Vaccine news boosts national confidence

At UK level, the report tracked a dramatic increase in business confidence after the 9th of November announcement that the Pfizer and BioNTech vaccine has 90% efficacy against COVID-19.

Firms surveyed after the announcement between 9th and 16th November had an overall confidence of -15%, which was seven points higher than those polled before, between the 2nd and 8th November (-22%).

For the month as a whole, UK business confidence registered at -21%, down three points on October.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Large swathes of the North West have been subject to the tightest COVID-19 restrictions over most of the summer, and so the addition of a national lockdown will have added to the challenges many face.

“But, with the roll-out of mass testing after a successful trial in Liverpool and more encouraging vaccine news, there’s hope that a viable COVID-19 exit strategy is beginning to form – which could buoy confidence in the months ahead. We’ll continue to stand by the side of local firms, providing the tailored guidance and support they need.”

UK regional and sector overview

The North East had the highest confidence in November at -8%, followed by Yorkshire & the Humber (-11%) and Wales (-18%). Meanwhile, optimism fell 10 points in Scotland to -38% making it the least confident of the UK’s nations and regions.

National sector summary

In the industry sectors, confidence declined in manufacturing, construction and retail as stricter lockdown measures were imposed across the UK. Manufacturing confidence fell by 10 points to ‑25%, driven by a sharp fall in optimism about the economy and a smaller decline in trading prospects (chart 3). Construction confidence dropped by 13 points to ‑23%, while retail confidence fell by five points to ‑12%. Services confidence, meanwhile, increased slightly by three points to ‑21%, having already fallen significantly in October.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The sustained number of coronavirus cases and more restrictive lockdown measures saw overall business confidence fall again this month. Firms across the sectors also continue to remain cautious as they prepare for a new trading relationship with the EU. However, confidence increased following the news of a potential vaccine to help combat the virus. The months ahead will be key for businesses as they navigate the winter months and adapt to the evolving landscape.”