Business confidence in the South West of England fell six points during July to 19%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South West report lower confidence in their business prospects at 18% and lower economic optimism at 19%.
As a result, a net balance of 20% of businesses in the region now expect to hire more staff during the next year, down eight points on last month.
Nationally, overall confidence edged ahead to 30 per cent, up one point on June, as firms’ optimism about the economy rose two points to 25%. Businesses’ confidence in their own business prospects was steady at 34%.
The Business Barometer questions 1,200 businesses every month and provides early signals about UK economic trends both regionally and nationwide.
Andrew Kemp, regional director for the South West of England at Lloyds Bank Commercial Banking, said: “Businesses across the South West have seen their confidence slide since earlier this summer, with both a lack of optimism about the state of the economy and their own prospects driving this feeling. In some ways, this can be attributed to continued economic uncertainty.
“But this is not preventing them from investing in growth, with more firms still expecting to increase their staffing levels than reduce them, albeit at a reduced rate than a month ago.
“It is good to see firms constantly revisiting and refreshing their strategy plans to respond to both challenges and opportunities. Uncertain conditions increase the need for firms to manage their working capital closely so they have access to the funds they need to deal with unforeseen changes.”
Across the region, a net balance of four per cent of businesses feel that the UK’s exit from the European Union will have a negative impact on their expectations for business activity. This contrasts with a month ago, when a net balance of 11 per cent of firms expected it to have a positive impact.
Businesses in the West Midlands showed the most confidence, at 49 per cent, ahead of London (47%) and the North West (38%).
Businesses in the East of England were the least confident, with an overall confidence of 14 per cent, followed by Wales and Scotland, both at 17%.
Overall confidence was the strongest in the construction sector (48%), followed by manufacturing (38%) and transport and communication (28%).
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The fact that economic optimism rose across the UK as a whole this month illustrates a slightly more positive view on the balance of risks for the country’s economy, despite the expected interest rate rise this year.
“It will be interesting to see if the overall business confidence measure shifts from its steady position towards the end of the year.”