Business confidence in the West Midlands increased in May, latest Lloyds Business Barometer reveals

Business confidence in the West Midlands rose 13 points during May to 62 per cent, according to the latest Business Barometer from Lloyds.

Companies in the West Midlands reported higher confidence in their own trading outlook month-on-month, up 12 points at 67 per cent.

When taken alongside their optimism in the economy, up 13 points to 56 per cent, this gives a headline confidence reading of 62 per cent (versus 49 per cent in April 2026).

Overall confidence in the region is also up 12 points compared to May 2025 - the largest year-on-year increase of any UK region.

The West Midlands also recorded the second-highest confidence reading this month, behind the North East, according to the study by Lloyds which has a regional base in the Business District in Birmingham city centre.

West Midlands firms’ confidence in their own trading outlook was driven by stronger customer demand through new clients or contracts (63 per cent), increased investment in capacity or technology (49 per cent) and improved supply chain conditions (22 per cent).

Meanwhile, confidence in the economy was driven by strong customer or market demand (67 per cent), improving interest rates or financial conditions (49 per cent) and industry-specific improvements (33 per cent). Almost half (49 per cent) of businesses in the region also expect to increase staff levels over the next year, unchanged on last month.

Since May 2025, the West Midlands has had an average overall business confidence of 54 per cent with its largest figure of 66 per cent in March this year and its lowest of 30 per cent in June.

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as entering new markets (47 per cent), introducing new technology, such as AI or automation (44 per cent), and investing in their team, for example through training (34 per cent).

Dave Atkinson, regional director for the West Midlands, said: “West Midlands firms have come into May with rising optimism both in their own trading prospects and in the wider economy. “What stands out is the focus on growth, with nearly half of businesses looking to enter new markets, while many are also prioritising new technology and investing in skills through training. Those choices point to ambitious plans, and they’re backed up by expectations to grow headcount over the next year.

“As businesses look ahead to the next six months, we’ll continue to work closely with companies across the region to help them navigate costs and uncertainty, and to fund investment that supports productivity and long-term growth.”

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Overall, UK business confidence rose three points in May to 47 per cent. Firms’ trading outlook rose four points to 58 per cent and their optimism in the economy generally rose two points to 35 per cent. Sixty-six percent expect stronger output over the year ahead, while eight per cent predict weaker activity.

The main drivers behind businesses expecting a decrease in activity remain the same as in April; economic uncertainty, higher cost pressures and weaker customer demand.

Business confidence rose across seven of the 12 UK regions and nations in May, and decreased in four. Northern Ireland saw notable gains with North East and West Midlands becoming the most confident regions.

Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “Business confidence edged up modestly in May, suggesting firms are beginning to steady after April’s decline. This month, confidence levels from businesses in the North East particularly stands out. It's also reassuring to see that increased confidence from the construction sector has brought them more in line with their retail, services and manufacturing counterparts.

“Across the UK, each region and nation presents unique opportunities and drivers of growth - whether that’s clean energy in the North East, advanced manufacturing in the West Midlands or tourism and hospitality in Scotland. We've seen first-hand what the right financial support and advice can do for ambitious businesses and are keen to continue supporting our customers as they grow - helping Britain prosper.”