'Firms are reporting confidence in their trading prospects' says senior Lloyds economist as latest Business Barometer shows how West Midlands companies are faring

The latest Business Barometer from Lloyds shows business confidence among firms in the region rose two points during January to 65 per cent.

Companies in the West Midlands reported higher confidence in their own business prospects month-on-month, up 20 points at 80 per cent. When taken alongside their optimism in the economy, down 16 points to 50 per cent, this gives a headline confidence reading of 65 per cent - versus 63 per cent in December 2025.

A net balance of 64 per cent of businesses in the region also expect to increase staff levels over the next year, up 17 points on last month.  

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as investing in their team, such as through training (60 per cent), evolving their product offering (52 per cent) and introducing new technology (51 per cent).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide. 

Overall, UK business confidence fell three points in January to 44 per cent.  

While firms’ confidence in their own trading prospects rose seven points to 59 per cent, their optimism in the wider economy fell 14 points to 28 per cent.  

Dave Atkinson, regional director for the West Midlands at Lloyds which has a large base in Birmingham city centre's business district, said: “It's encouraging to see West Midlands businesses maintaining confidence in their own prospects. 

“What really stands out from this month’s data is the clear intention to invest in people, with firms prioritising both team development and new hires. Combined with a strong interest in product evolution and new technology, this shows businesses are thinking strategically about growth.” 

London was the most confident UK nation or region in January (68 per cent), followed by Northern Ireland (66 per cent) and the West Midlands (65 per cent).   

Retail sentiment increased marginally in January, up two points to 49 per cent, while confidence in the service sector rose slightly - up one point to 42 per cent, the first increase since the summer. Confidence fell in the construction sector following a particularly strong increase in December.   

Hann-Ju Ho, senior economist with Lloyds Commercial Banking, said: “Firms are reporting confidence in their trading prospects at the start of the year, despite a slight softening of wider economic optimism. This points to businesses’ ability to manage external risks and a focus on growth opportunities.   

“The first rise in confidence in the services sector in seven months is encouraging given the sector’s central role in supporting UK economic activity.”