Business confidence in West Midlands falls but firms stay focused on year ahead - latest Lloyds' survey shows

The latest Business Barometer from Lloyds shows business confidence in the West Midlands fell 17 points during April to 49 per cent.

Companies in the West Midlands reported lower confidence in their own trading outlook month-on-month, down 16 points at 55 per cent. When taken alongside their optimism in the economy, down 19 points to 43 per cent, this gives a headline confidence reading of 49 per cent - compared to 66 per cent in March.

A net balance of 49 per cent of businesses in the region also expect to increase staff levels over the next year, up one point from last month.

Looking ahead to the next six months, businesses across the West Midlands identified their top target areas for growth as evolving their offering, such as by introducing new products or services (53 per cent), investing in their team, for example through training (45 per cent), and introducing new technology, such as AI or automation (43 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.

Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “Businesses told us their confidence fell as inflation pressures re-emerged, global uncertainty persisted and costs remained elevated.

“While sentiment declined, it remained above the long-term average, with nearly two-thirds expecting stronger output in the coming year.

“UK businesses are resilient and adept at deploying strategies to defend growth in uncertain conditions. Over the past month, we’ve seen them opt for flexibility wherever possible. They’re building contingency into their short and medium-term plans, rather than expecting a rapid return to normal. Protecting margins has become more important. That means tougher cost scrutiny and a greater focus on balancing growth with profitability.

“In this environment, as with other recent market disruptions, we continue to observe that sustainable success comes from discipline, resilience and clarity about what really drives long term value.”

Overall, UK business confidence fell 11 points in March to 44 per cent.

Firms' confidence in their own trading outlook fell six points to 54 per cent, and their optimism in the wider economy dropped 17 points to 33 per cent.

The East Midlands was the most confident UK region in April at 53 per cent, followed by London at 51 per cent and the West Midlands at 49 per cent.

Dave Atkinson, regional director for the West Midlands, said: “Confidence in the West Midlands has softened this month, as firms take a more considered view of both their own trading prospects and the wider economy.

“Despite that, businesses are still focusing on growth by evolving their offering, investing in skills and adopting new technology such as AI and automation. We’ll continue to support firms as they turn these plans into practical next steps.”