Yorkshire business confidence falls sharply in first month of 2026

When taken alongside their optimism in the economy – down 27 points to 22 per cent – this gives a headline confidence reading of 29 per cent, compared to 53 per cent in December.

Looking ahead to the next six months, Yorkshire businesses identified their top target areas for growth as investing in their team.

Some 42 per cent said they wanted to invest in training, while 41 per cent said they hoped to introduce new products and services, and 40 per cent wanted to enter new markets.

Martyn Kendrick, regional director for Yorkshire and the Humber at Lloyds, said: “While business confidence in Yorkshire dipped in January, it’s encouraging to see firms across the region continuing to prioritise investment in their teams.

“This month's data clearly shows that many businesses are putting plans in place to support future growth.

“As companies across the region mobilise their 2026 strategies, we’ll continue to provide the tools and support they need to help them make the most of new opportunities ahead.”

Nationally, UK business confidence fell three points in January to 44 per cent. While firms’ confidence in their own trading prospects rose seven points to 59 per cent, their optimism in the wider economy fell 14 points to 28 per cent. London was the most confident UK nation or region in January at 68 per cent, followed by Northern Ireland at 66 per cent and the West Midlands at 65 per cent.

Confidence in the service sector rose one point to 42 per cent, marking the first increase since the summer, while confidence fell in the construction sector following a particularly strong increase in December.

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “Firms are reporting confidence in their trading prospects at the start of the year, despite a slight softening of wider economic optimism. This points to businesses’ ability to manage external risks and a focus on growth opportunities.

“The first rise in confidence in the services sector in seven months is encouraging given the sector’s central role in supporting UK economic activity.”

Retail sentiment went up by two points to 49 per cent after firms reported lower than hoped for sales over Christmas, with footfall numbers dropping across the key festive trading period.

Total UK footfall was down 2.9 per cent over December year on year, according to data from the British Retail Consortium (BRC) and Sensormatic.

Visits to the high street were down by 0.9 per cent, retail park footfall fell 2.5 per cent and shopping centres had 5.1 per cent fewer Christmas customers than the year before.

UK footfall over the year was down 0.8 per cent compared with 2024, while visitors over the three months to December fell by 2.2 per cent.

BRC chief executive Helen Dickinson described December as “disappointing” for retailers.

She added: “In the face of rising bills and food costs, many consumers held off for post-Christmas sales, with the week after Christmas the only one to see a significant uplift.”