Business confidence in the East of England is the lowest of any UK region as rising living costs impact people's disposable incomes.

The latest Business Barometer from Lloyds Bank Commercial Banking found confidence among companies in the region was just 14pc, down by 20 points month-on-month.

Businesses in London were the most optimistic of all UK regions, with a rating of 63pc, up 23 points compared to the previous month, and the North West also reported a feeling of certainty with a rating of 44pc, an increase of 12 points.

Construction firms in the East of England reported being the most optimistic sector in the region with a confidence rating of 54pc, up 21 points month-on-month, followed by manufacturing with a score of 45pc, rising by two points.

It also revealed that 13pc of businesses in the East expect to increase staff levels over the next year, a fall of four points compared to the month before.

Dene Jones, regional director for the East of England at Lloyds Bank Commercial Banking, said: “With rising costs taking their toll, businesses in the East are facing some challenging conditions.

"But despite this, there is optimism among many businesses, with firms eyeing expansion opportunities and investing in their teams to help establish the skills they need for growth.

“That said, it’s crucial that the region’s businesses keep a close eye on cashflow and closely manage their working capital at this turbulent time to ensure they have the funds they need to invest to hand. This includes taking the time to optimise inventory levels, and review customer payments to identify any potential bottlenecks.”

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added: “Business confidence improved this month and firms in general seem able to rebuild some of their margins through price increases. However, they also report several challenges ahead, including concerns around higher costs and an economic slowdown.

"More immediately, consumer-facing industries, such as retail, are not feeling the same confidence uplift amid the widespread reports of a squeeze on household incomes.”