Business confidence in the South East fell seven points during December to 29%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South East reported lower confidence in their own business prospects month-on-month, down two points at 38%. When taken alongside their optimism in the economy, down 10 points to 22%, this gives a headline confidence reading of 29%.
The region’s businesses identified their top target areas for growth in the next six months as evolving their offer (42%), investing in their team (37%) and entering new markets (32%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 27% of businesses in the South East expect to increase staff levels over the next year, down six points on last month.
Overall UK business confidence fell two points in December to 35%, the first decrease since August, driven largely by firms’ outlook on the overall UK economy which dipped by eleven points from 38% to 27%. Businesses’ optimism in their own trading prospects also decreased, but less markedly so – by five points to 43%.
Companies’ hiring intentions also dropped slightly with 29% of firms intending to increase staff levels over the next 12 months, down six points month-on-month.
Firms in West and East Midlands were the only regions to report an increase in confidence, up one point to 33% and up five points to 34% respectively. The North East was most confident, remaining at 48% for the second consecutive month, followed by the East of England (45%), London (38%) and the South West (36%).
Firms in the services industry reported a significant decrease in confidence, down 16 points to 30%, due to moderation in both trading prospects and economic optimism. Manufacturing confidence also eased back (38%, down seven points). However, retail and construction both bucked the trend with rises to 44% (up two points) and 37% (up two points) respectively.
Becci Wicks, regional director for the South East at Lloyds Bank Commercial Banking, said: “It’s been a challenging year in the South East, as businesses have battled high prices and rising interest rates.
“While the results appear to reflect these headwinds, I know that firms won’t be dwelling on what has been, but on what’s to come.
“Firms in the region say that evolving their offer is going to be a key driver for growth in the first half of 2024.
“This will mean careful planning – especially with interest rates due to remain elevated for the majority of the year – and investing in the areas they know will turn the dial for growth. We’ll work by the side of businesses to strategically pinpoint these areas and offer the solutions that will support those ambitions.”
