Following a generally downward trend since April 2018, the Savanta Business Confidence Index rallied during Q4, with a significant rise to 48.
Larger businesses with annual sales above £1m continue to be the most confident group with a confidence index of 50, representing an increase in score of 1 point compared to Q3.
Change in confidence was greatest among smaller established businesses, who represent most enterprises by number, and whose confidence index rose by 4 points to finish Q4 at 48.
Although new start-ups remain the least confident segment at 44, this too represents an increase in confidence of 1 point on their Q3 score.
In terms of geographic location, confidence increased across all 6 regions. This was most notable in Scotland, the North & North-West which recorded a rise of 4 and 5 points respectively.
Despite this rise in confidence, Scotland remains the least confident region with an index of 42. The North/North-West now becomes the most optimistic region with an index of 52. London is the second most optimistic region with a score of 50 (and a rise in index of 3 from Q3 to Q4).
The index of less than 50 in other regions means more businesses are pessimistic rather than optimistic about the current state of the economy.
Of note, whilst 5 of the 6 regions enjoyed at least a 3-point rise in confidence score, the South East index only increased by 1 point at Q4.
Industry sector continues to be a stronger differentiator of sentiment than region, both in terms of the size of the quarterly shifts within a given sector and the degree of variation from one sector to another.
As Q4 confidence rose in 8 of the 9 sectors – confidence in the Wholesale market remained stable.
The biggest rises occurred in Education (up 12 points to 52), Production (up 9 to 50), Transport (up 6 to 48) and Accommodation (up 5 to 49). Confidence is highest in the Education (52), Construction (51) and Production (50) sectors.
In terms of age of business owners, the change noted at Q3 for the 65+ group to be the most confident continues.
Confidence amongst the youngest age group (unchanged at 34) has remained stable following the fall in confidence at Q3 whilst confidence has risen by 4 points amongst both those aged 35-64 (to 47) and those aged 65+ (to 52).
Mark Dennis, Director of Savanta, said:
“With the majority of our fieldwork conducted in the quarter before the 12th December general election, it is interesting to see confidence levels rise virtually across the board. We eagerly await the results from Q1 2020 to see if this trend continues now the election outcome is known.”
Q4 findings are from Savanta’s MarketVue Business Confidence programme, conducted among 3,081 British businesses from start-ups to companies with £1bn turnover, surveyed from 1st October to 18h December 2019. Indices are mean scores based on a scale of ‘extremely positive’ (100), ‘fairly positive’ (75), ‘neither positive nor negative’ (50), ‘fairly negative’ (25) and ‘extremely negative’ (0).