Gloomy South West firms see no short-term relief from Covid-19 but vaccine roll-out lifts spirits of some

January 29, 2021

Business confidence among South West firms has slumped to the lowest in England as the latest lockdown pushes sales down further and puts more pressure on staffing levels.

Just 11% for businesses in the region expect trading levels to have returned to pre-pandemic levels by this time next year while one-in-five expect to have to make job losses to survive. 

The grim picture emerges from the latest Business Barometer from Lloyds Bank Commercial Banking, which is published today.

A separate survey conducted by the Federation of Small Businesses (FSB) among its members paints much the same picture, with more than half of firms suffering a drop in profits in the final quarter of 2020 and even more expecting them to fall in the coming three months.

Nearly one in four reduced their workforce between October and December.

The Lloyds Business Barometer shows companies’ confidence in their own business prospects month-on-month fell by 18 percentage points to minus 16% while confidence in the regional economy was down by nine points during January to minus 1%.

The headline confidence reading of minus 8% compares to plus 5% in December and makes the South West the gloomiest English region.

Scotland and Wales had bigger falls but firms in London reported a month-on-month increase in confidence of five percentage points to 3%, with those in the South East and North West rose by seven percentage points to minus 4% and eight percentage points to minus 5% respectively. 

However, the Business Barometer, which questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide, did show a level of confidence about prospects as the vaccine programme starts to roll out.

Some 44% across the UK said it had made them feel more confident about the year ahead.

Lloyds Bank Commercial Banking South West director David Beaumont, pictured, said: “After a challenging festive period, business confidence in our region is now back in negative territory.

“A third national lockdown is hindering firms’ ability to trade effectively – especially those in the hospitality and tourism sectors that are the lifeblood of the South West economy.

“However, the vaccine rollout appears to have given businesses hope of a return to some level of normalcy this year.”

Nationally, the construction sector was the most upbeat, with confidence levels improving for a second month, rising four points to minus 1%.

Manufacturing firms’ confidence levels slipped by nine points to 9%, services fell by four points to minus 9% and retail by five points to 6%.

The FSB survey,  which was carried out at the end of December before the latest lockdown restrictions started, showed across the UK around 5% of firms expect to close down this year – which, if represented across the whole SME community, could mean a quarter of a million small business closures.  

However, in contrast to the Lloyds Business Barometer, the FSB survey shows small business confidence in the South West was higher than the national average and revealed that even in the midst of the crisis, some 10% of the region’s firms had increased their workforce. 

FSB South West chairman Lee Nathan, pictured, said the survey results were understandable considering the pressures small businesses are facing at the moment.

“Once again these figures reflect how difficult it is out there for small businesses and they are a stark reminder about why it is so important that the government continue to find new and innovative ways to help SMEs.

“It is small businesses that will be part of the solution for economic recovery but they can only do it if they get that extra support now.

“Helping small businesses is not a giveaway – it is an investment in the future.”     


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