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Business confidence in the East of England rose 20 points month-on-month during December to -1%, its highest point since the beginning of the pandemic in March, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the East reported higher confidence in their own business prospects month-on-month at 12%, indicating that firms expect activity to increase for the first time since February, while optimism in the economy grew nine points month-on-month to -13%. Together, this gives an overall confidence of -1%.

Businesses expected staffing levels to stay the same over the next 12 months – making December the first month since February that firms haven’t expected to decrease headcounts. In November, a net balance of 26% of East of England businesses had planned to cut staff.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Across the UK, overall confidence saw its largest monthly increase for more than four years in December, following vaccine progression announcements. Confidence climbed by seventeen points to -4% in November to -4%. Economic optimism jumped 23 points to -5%, while firms’ confidence about their trading prospects increased 11 points to -3%.

All 12 UK nations and regions saw a rise in overall confidence during December. The most marked improvements were reported in Scotland (up twenty-nine points to -9%); the South West (up twenty-two points to 5%) and the West Midlands (up twenty-two points to 4%). The North East, South West and West Midlands all moved into net positive territory for the first time since March this year.

The South West recorded the highest confidence at 5%, followed by the West Midlands and the North East, each at 4%. The North West had the lowest confidence during December at -13%, despite confidence increasing month-on-month by 15 points.

Dave Atkinson, regional director for the East of England at Lloyds Bank Commercial Banking, said: “The East of England has come very close to an overall confident view once again, something we haven’t seen since the pandemic began in March. This, alongside an improved outlook for staffing levels, suggests that momentum is beginning to build behind the region’s recovery.

“Businesses in the East have proven their resilience throughout this crisis, and we’ll continue to stand by their side, providing the guidance and support needed to help them navigate the months ahead.”

Sector overview

In the industry sectors, confidence reached the highest levels seen since the start of the pandemic. Manufacturing reported a strong rebound this month despite looming uncertainty during the survey period about the UK’s new trading arrangements with the EU, surging by twenty-five points, from -25% to 0%. This was followed by a growth in confidence for construction, which rose by eighteen points to -5% services, which jumped by sixteen points to -5% and the retail sector which reported an 11 point lift in confidence to -1%. Nevertheless, entering the holiday trading period, confidence in retail, as in other sectors, remains below the long-term average.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU. While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”