West Midlands business confidence falls in February – report

Business confidence in the West Midlands fell 31 points during February to 34 per cent, according to the latest Business Barometer from Lloyds. 

Companies in the West Midlands reported lower confidence in their own business prospects month-on-month, down 40 points at 40 per cent.

When taken alongside their optimism in the economy, down 21 points to 29 per cent, this gives a headline confidence reading of 34 per cent (vs. 65 per cent in January). 

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as entering new markets (44 per cent), evolving their offering (44 per cent), and investing in their team, for example through training (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.  

Overall, UK business confidence was unchanged since January at 44 per cent.  

Firms’ confidence in their own trading prospects fell six points to 53 per cent, but their optimism in the wider economy rose eight points to 36 per cent.  

London was the most confident UK nation or region in February (59 per cent), followed by the North West (58 per cent) and Northern Ireland (58 per cent).   

The construction sector saw strong gains in overall confidence. In February, confidence was up 14 points to 60 per cent, with manufacturing also seeing a boost, up five points to 37 per cent.

Confidence for retail and service sector firms softened slightly, each down two and three points respectively.  

Dave Atkinson (pictured), regional director for the West Midlands, said: “Although confidence has fallen this month, we know that West Midlands firms are continuing to press ahead with their growth strategies – from targeting new markets and launching new products to investing in their teams. 

“We’ll continue to be there with our support to help them take their next steps.” 

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “It’s encouraging to see optimism in the wider economy returning, although with a small reduction in firms’ confidence in their own trading prospects. 

“The majority of the survey results were collected following the Bank of England’s close decision to hold interest rates at its February meeting, signalling potential easing ahead, which may have alleviated business concerns, including those around cost pressures. While the rise in pricing expectations to a six month high may indicate firms are looking to rebuild their margins in 2026. 

“It’s also great to see confidence increase for manufacturers and construction firms as they are key for UK growth.”