Business confidence in the South West has hit a record low as the coronavirus lockdown sees demand for goods and services has evaporated.
The latest Business Barometer, from Lloyds Bank Commercial Banking, shows confidence fell 16 points during May 2020 to a record low of -51% and the worst in the UK.
Companies in the South West reported marginally higher confidence in their own business prospects month-on-month at -35%.
But when taken alongside their views on the economy, this gives a headline confidence reading of -51%.
In an illustration of the impact Covid-19 is having on the region’s business, the majority of firms continued to see demand negatively affected during May, with the picture worsening month-on-month.
Almost three quarters (73%) experienced a fall in demand for their products and services, up six points on the month before. Meanwhile, just 2% experienced an increase in demand, down 11 points on April.
The number of firms in the region operating at less than 50% capacity increased 14 points to 49%. One in seven (14%) wasn’t operating at all, down two points on April.
Of the 70% of businesses reporting disruption to their supply chain during May, 18% expected the situation to improve within six months, while 11% forecast that it would take more than 12 months to return to normal levels.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “Business confidence in the South West has been the hardest hit in the country during May.
“The region’s economy relies heavily on tourism, a sector that has been heavily impacted by the shutdown, which would otherwise be gearing up for the summer season.
“From hotels in St Ives to zoos in Bristol, we’re standing by the side of firms in the region, ensuring they have the support needed to get through these challenging times.”
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Across the UK, business confidence held steady month-on-month, dipping just one point to -33%. The North East and London both saw confidence rise month-on-month, scoring the joint-highest confidence reading at -20%.
From a regional perspective, despite all being in negative sentiment, six of the 12 regions reported a higher confidence in May.
The North East was the least negative region at -20%. The South West was the most negative region at -51% followed by the South East at -45%.
In May, the construction sector saw the sharpest decline, falling 24 percentage points to -44%. However, all the three other major sectors saw a modest increase.
The retail sector increased eight points to -25%, while manufacturing rose to -27% and services saw a small increase of four points to -18%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Despite the results partly capturing the period since the Government’s announcement of an initial easing of restrictions, trading conditions remain difficult for most firms. Nevertheless, a further relaxation of constraints will enable more businesses to resume their activities.”
