More than two thirds of South West businesses have seen demand for goods and services fall during the coronavirus crisis, a new survey shows.
It means business confidence in the South West has – not surprisingly – plummeted during the pandemic and is now amongst the lowest in the UK.
The region’s reliance on tourism, which has taken a kicking from the Covid-19 lockdown, is thought to be one reason why confidence fell 51 points during April 2020, landing at -35%.
The new Business Barometer from Lloyds Commercial Banking also reveals that firms in the South West reported lower confidence in their business prospects month-on-month at -40%.
When taken alongside their views of the economy overall, this gives a headline confidence reading of -35%.
In an illustration of the impact of Covid-19 on the region’s business, the majority of firms reported a significant decrease in demand for their goods and services, with 67% seeing demand fall in April compared to 13% who saw it rise.
More than a third (35%) of businesses in the region reported operating at below 50% capacity, while 48% were operating above this level. One in six (16%) firms wasn’t operating at all.
Of the 84% of businesses that reported disruption to their supply chain during April, 33% expected the situation to improve within six months, while 8% expected it would take more than 12 months to return to normal.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “Businesses in the South West, an area that usually benefits from being one of the country’s tourism hotspots, reported one of the lowest levels of confidence in the UK during April.
“We’re working alongside the regions firms to ensure they have the finance needed to weather current challenges, including £2billion of arrangement fee-free finances, and capital repayment holidays on loans for those that have been severely affected.”
Across the UK, overall confidence fell 38 points to -32% as firms’ optimism in the economy and confidence in their own prospects dropped sharply. Wales reported the lowest confidence at -52.
In April, overall business confidence fell across all four sectors. Confidence in the manufacturing sector saw the sharpest decline, falling 46 percentage points to -35%, with the retail sector falling to -33%. The construction sector fell by 34 percentage points to -20%, while services fell 23 points to -22%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The results in April demonstrate the full impact of the measures taken by the Government to shut down large parts of the economy to help contain the pandemic, with sentiment now matching the all-time low of December 2008.
“There are tentative signs that China’s economy is stabilising as it starts to ease lockdown measures, and that may serve as a template for the rest of the world.”
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Its measure of overall business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects.
The Business Barometer results provide early signals about UK economic trends. The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BVA BDRC.
This survey was conducted with 1,200 companies – including 66 businesses in the South West - between March 31 and April 16.
