Four in 10 West Midlands firms planning to hire over next year despite confidence drop – report

Business confidence in the West Midlands fell 27 points during October to 42 per cent, according to the latest Business Barometer from Lloyds.

Companies in the West Midlands reported lower confidence in their own trading outlook month-on-month, down 16 points at 50 per cent.

When taken alongside their optimism in the economy, down 40 points to 33 per cent, this gives a headline confidence reading of 42 per cent (vs. 69 per cent in September 2026).

Despite this, West Midlands firms reported stronger customer or market demand (57 per cent), improving interest rates or financial conditions (33 per cent) and better economic data or news (31 per cent) as reasons for optimism in the economy.

A net balance of 39 per cent of businesses in the region expect to increase staff levels over the next year, down 15 points on last month.

Business confidence in the West Midlands now sits below the 12-month average of 55 per cent, with its highest figure this year of 69 per cent in September.

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as investing in their team, for example through training (52 per cent), investing in sustainability (42 per cent) and evolving their offering by introducing new products or services (38 per cent).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

Graham FitzGerald (pictured), regional director for the West Midlands at Lloyds, said: “This month’s fall in confidence for businesses in the West Midlands shows that firms are carefully considering the wider economy, and remaining mindful of their own trading outlook.

“Despite this, businesses are still looking for opportunities for growth and are continuing to reinvest to help enhance their resilience and position themselves for future growth. We’ll continue supporting businesses across the West Midlands to bring their growth plans to life.”

Overall, UK business confidence rose six points to 47 per cent in October, sitting above the long-term average of 30 per cent.

The rise follows September’s reading of 41 per cent. October has also seen an improvement in firms’ own trading outlook and economic optimism, despite continued uncertainty from the Middle East conflict.

Optimism in the wider economy rose nine points to 40 per cent, compared to a 12-month average of 37 per cent. The drivers that led to the increase included stronger customer demand, better economic news, and improving financial conditions.

Businesses’ own trading outlook increased five points to 55 per cent, compared to a 12-month average of 56 per cent.

Nearly two thirds of firms (63 per cent, up six points from September) expect an increase in activity over the year ahead, while those expecting a decrease in activity rose by one point to 8 per cent.

Among firms expecting stronger activity, the main drivers were stronger customer demand, increased investment in technology and improved supply chain conditions.

Fiamma Morton, managing director, SME Banking at Lloyds, said: “I hear from business owners every day about their determination to keep moving forward. There are still challenges, but increasingly the conversation is about what comes next: where new customers will come from, how technology can make the business better, and where investing today might create an opportunity tomorrow.

“There are careful choices to make. Cost pressures haven’t gone away, so investment needs to work hard. But the ambition is absolutely there. Businesses are continuing to find ways to grow, adapt and make their next move.”