Business Confidence picks up, showing signs of stability towards the end of 2023

The Savanta Business Confidence Index saw an improvement this quarter, from 37 in Q3 2023 to 39 in Q4 2023, but this is not significant.

Confidence increased for start-ups and for established businesses with a turnover of up to £1m but remained stable for larger businesses

New start-ups have a Confidence Index of 40, an increase of +3 points compared to Q3 2023.

The Confidence Index among smaller established businesses has increased by one point to 38. Larger businesses, with annual sales above £1m, remain stable and are the most confident group with an Index of 42.

Confidence increased in 3 geographical regions

South East is the most confident region, with a +4 points significant increase in the Confidence Index compared to Q3 2023 and is now at 41.

Wales/South West, Midlands/ East and London have a score of 39, in joint second position. Wales/South West has increased significantly by +5 points from Q3 2023, Midlands/ East has increased by +1 point while London remains stable.

The North/North West has fallen from being the second most confident region to the second least confident, its score decreased by -1 point to 37 this quarter.

Scotland has the lowest Confidence Index, with a decrease of -2 points its score is now 33.

An Index of less than 50 means more businesses are pessimistic, rather than optimistic, about the current state of the economy.

Confidence up in most industry sectors

In Q4 2023, confidence increased in 7 of the 9 industry sectors (Accommodation, Wholesale, Production, Business Services, Agriculture, Transport and Other Services) but decreased in 2 (Education and Construction).

The greatest increase was in the Accommodation sector, with a fourth increase in a row this quarter (+5 points), gaining joint first position with a score of 41 with Agriculture (+4 points).

Production is in second position with a score of 40, an increase of +2 points from Q3 2023.

The Transport and Wholesale sectors have equal Confidence Indices (39). Transport shows an increase of +3 points whilst Wholesale increased by +1 point.

Business Services, Other Services, Construction and Education are below average.

The Business Services and Other Services sectors have the same Confidence Indices (38), with an increase of +1 point for the former and +4 for the latter.

Construction has a score of 36, a loss of -1 point and Education has dropped from 1st to last position with a loss of -8 points to 35.

Amongst start-ups and small businesses, Business Confidence decreased for up to 34 years and increased for 35-64s and 65+

Looking at start-ups and established businesses with a turnover of £0-2m, Business Confidence decreased for younger business owners (up to 34 year-olds), but not significantly so (-4 points to 32).

Scores for those aged 35-64 increased by +1 point to 38.

Those aged 65 and over remain the most confident group this quarter, with a score of 41 up 2 points from last quarter.

Commenting on the findings Philippa Whitham, Senior Director at Savanta, said:

“After such a long period of instability, it is reassuring to see 2023 ending with an increase in confidence, albeit a small one. Indeed, whilst confidence is still well below pre-pandemic levels, 2023 has actually seen little movement across the quarters, suggesting that businesses have grown accustomed to the current economic outlook, resulting in confidence becoming less volatile. With a general election due by January 28th 2025, it will be intriguing to see what 2024 brings”.

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About Market Vue Business Confidence

Quarterly findings are from Savanta’s Market Vue Business Confidence programme conducted among 2585 GB businesses from start-ups to companies with £1bn turnover, surveyed between 20th September 2023 – 15th December 2023. 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), for the question “How do you feel about the current health of the UK economy?”

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