Business confidence in the South East rose 17 points during August to 47% – its highest level in the region since January 2018 – according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South East reported higher confidence in their own business prospects month-on-month, up three points at 48%. When taken alongside their optimism in the economy, up 32 points to 47%, this gives a headline confidence reading of 47%.
The region’s businesses identified their top target areas for growth in the next six months as introducing new technology (33%), evolving their offer (33%) and investing in their team (27%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 34% of businesses in the region expect to increase staff levels over the next year, up 11 points on last month.
Overall UK business confidence increased to its highest level since February last year, jumping 10 points to 41% in August. All 11 regions and nations reported a positive business confidence reading in August, with nine regions and nations reporting a higher confidence reading month-on-month.
Optimism in the UK economy also increased in August by 16 points to 37%, and the number of businesses expecting an increase in their trading prospects rose by three points to 46%.
Businesses in London reported the highest levels of business confidence at 52% (up 20 points month-on-month), its strongest reading in 14 months and ahead of the South East. Firms in the South West followed at 46% (up 12 points month on month).
The construction, retail and service sectors all saw a rise in business confidence in August. Services gained 12 points to reach a 22-month high of 42%, while retail firms were up nine points to 44%, an 18-month high.
Construction firms’ confidence also increased by 11 points to a four-month high of 42%. In contrast, manufacturing confidence fell for a second consecutive month with a four-point decline to 30%, taking it to the lowest level since April 2023.
Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: “This is a huge moment for the South East. Confidence reaching the highest level since 2018 is an incredible achievement and a testament to firms’ attitude right now to growing and seizing on the opportunities coming their way.
“The next challenge will be keeping this momentum going. I know that businesses are eyeing up investments in all areas, particularly in improving their sustainability.
“Those looking for environmental improvements to their operations should explore what financial support is out there with discounted lending available on green-related lending and specialist support on hand to help identify a clear strategy to a sustainable future.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, added: “The bounce in economic optimism this month is the standout point.
“Our analysis shows that businesses felt relief that interest rates may be reaching their peak, alongside hopes that measures to tackle inflation are having an impact.
“With trading prospects remaining stable, and hiring and wage intentions also rising, the macro environment for small businesses and those outside the manufacturing sector is more upbeat.
“From the data, large firms and manufacturers are experiencing some degree of caution, which is likely to reflect the wider global economic environment and, for manufacturing, the rotation of spending towards services.”
