Business confidence falls to “record low” due to lockdown

The latest Lloyds Bank business barometer states that overall business confidence has plunged 38 percentage points to -32 percent in April, the lowest level since December 2008 at the start of the global financial crisis.

The steep decline illustrates the impact of the lockdown measures to contain the pandemic is having on UK businesses, with a Lloyds Bank survey of businesses between March 31 and April 16 revealing a “significant drop in both trading prospects and economic optimism” across all four sectors of retail, manufacturing, construction and services.

With overall business confidence in the retail sector falling to -33 percent in April.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said in a statement: “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 survey showed that current trading prospects fell to a record low of -25 percent, while economic optimism also dropped from 3 percent to -39 percent but remains above the levels seen in late 2008, despite sitting at a very low level.

37 percent of UK firms expected to cut staff in next 12 months

The outlook is also reflected in the firms’ assessment of their own hiring intentions, falling into negative territory for the first time since 2011 from 4 percent to -17 percent, which is resulting in predictions that job losses will rise considerably, as 37 percent of businesses surveyed said that they expect to reduce employment over the next 12 months.

In addition, businesses that are anticipating a pay freeze increased to 30 percent from 11 percent in March. However, Lloyds Bank did add that a fifth of businesses expected to increase employment.

Responding specifically to the impact of the coronavirus, 74 percent of businesses stated they had been hit hard, although 10 percent of firms said that they were benefiting from it.

In terms of the ability to supply their product or service, 22 percent of manufacturers expect their supply chain to return to levels seen prior to the outbreak within three months. The retail sector reported 28 percent, while within the construction sector 45 percent expect to see levels return within three months.

Paul Gordon, managing director for SME and mid corporates, Lloyds Bank Commercial Banking, added: “April has shown the unprecedented impact of the shutdown for businesses across the UK with trading prospects and overall confidence free-falling across the regions.

"During this time it is important that businesses take steps to access the government schemes such as tax deferment, rates reductions, small business grants and the job retention scheme and the various finance options available to them so that they can survive through this crisis and be best placed to open their doors again in the months ahead.”

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