Confidence amongst businesses in the South East, about their prospects in the next six months, has stalled with 40% of firms reporting profit falls compared with just 18% seeing increases, according to new research from Santander Corporate Banking.
The Santander Corporate Banking Business Confidence Index reveals that 68% of business owners in the South East are confident in the prospects of their own business for the first half of 2010. Confidence in the region is now lower than when the index launched in September 2009, when 77% of businesses were confident. It is also well below the UK average of 75%. The number of firms which are ‘very confident’ increased from 15% to 18% while those who are ‘confident’ fell from 62% to 50%. The figures for ‘not very confident’ rose from 21% to 27% while those who are ‘not confident at all’ increased from 3% to 5%.
Profit pressure
The analysis shows that it is the continuing squeeze on profits that is holding back confidence – 40% of companies in South East say their profits fell in the second half of 2009; compared with 18% which reported an increase.
The average profit fall in the region in the past six months is 15.4% compared with the average rise of 14.8%.
Regional divide
Businesses in the East Midlands, South West, Scotland and London are the most confident in the UK. Wales and the North East are the least confident business regions and the South East was also below the national average.
While optimistic about their own firms, business owners are slightly less confident about the prospects for companies in their region in general, with only 4% saying they are ‘very confident’, 53% per cent saying they are ‘confident’ (total 57%), and 44% expressing a lack of confidence (40% ‘not very confident’ and 4% ‘not at all’ confident’) in their prospects.
Lindsey Rix, regional director at Santander Corporate Banking, said: “Businesses in the South East remain generally confident about their prospects for the next six months but clearly the downward pressure on profits is hitting optimism with winners and losers emerging.
“The official end of the recession marks a turning point but sustained recovery and growth will be challenging, requiring support from the banking industry; Santander's strategy of building its presence in the UK corporate and commercial banking market is characterised by the focus we have on working with our customers to understand their businesses and provide solutions that reflect that understanding and we have seen a significant increase in the number of businesses that are attracted to working with us as they position their businesses for the future.”