Business confidence has bounced back from the four-year low seen in September and appears to be stable at the start of 2017, according to Business in Britain, the latest report from Lloyds Bank published on Tuesday (3 January).
The survey, which collects the views of more than 1,500 UK companies, showed that the confidence index rose to 14%, slightly up from the 12% recorded in the previous Lloyds report published in September 2016.
The confidence index refers to the average of respondents expected sales, orders and profits over the next six months.
Commenting on the report, Tim Hinton, MD, Mid Markets and SME Banking at Lloyds Banking Group said in a statement: "Business confidence definitely dipped a bit following the EU referendum result but it has picked up again in the last few months, though still below the long-term average.
"Putting this in context, confidence remains well above the lows of the financial crisis, driven by demand both in the UK and abroad. The banking sector also has a much stronger capital position to withstand any shocks than in 2008/09 which should give businesses more confidence that their growth ambitions can be supported in the year ahead.
Sector-specific, the report showed that the increase in business confidence varied across sectors. The manufacturing sector saw the highest rise from 14% to 28%. Meanwhile, the hospitality and leisure industries saw business confidence levels up from 16% to 28%. All other sectors saw a marginal fall in confidence levels.
Region-wise, confidence levels gained the most in the North East, up one point to 22%. Scotland followed with a 21% reading, up 15 points from the previous report. While the East of England saw a one point rise to 20%, the South West showed a 13 point increase in confidence to 17%. Meanwhile, confidence levels fell sharply in Wales and Yorkshire. It fell 10 points to 15% and 15 points to 17% respectively.
One of the other highlights of the report was that the economic uncertainty following the Brexit vote continued to be the biggest threat to businesses. According to the data, 26% of its respondents said Britain's decision to leave the EU could negatively affect business over the next six months.
The net balance of firms expecting stronger export sales in the next six months increased six points to 26%. This was said to be led by an increase in the number of firms anticipating stronger exports to Asia Pacific and the Middle East. Businesses said that the fall in the pound post the Brexit vote had been favourable to exports.
With regards to hiring and capital spending prospects over the next six months, the report found businesses to be cautious. While only 1% expected to increase their investments, 2% said they could increase their staffing levels.