UK business confidence falls from eight-year high, Lloyds says

Published : 1 week ago, on 30/09/2024

 

By David Milliken

LONDON (Reuters) – British business confidence ebbed slightly this month after reaching an eight-year high in July and August, as concerns about the broader economic outlook rose to a six-month high, a survey from Lloyds Bank showed on Monday.

Lloyds’ overall business barometer – which represents the difference between the percentage of firms with positive and negative views – fell by 3 percentage points to a three-month low of +47%. Businesses had a brighter view of their own prospects than those of the wider economy.

“The more mixed picture for economic optimism points to some businesses maintaining a degree of caution. While we still expect economic expansion, it may occur at a slower rate than the first half of 2024,” Lloyds economist Hann-Ju Ho said.

Official gross domestic product data due at 0600 GMT is likely to confirm Britain’s economy grew by 0.6% in the second quarter of 2024, capping a stronger-than-expected first half of the year as the country recovered from a shallow recession.

However, earlier this month the Bank of England trimmed its growth forecast for the third quarter and predicted a quarterly expansion of 0.3%, around Britain’s long-term growth rate.

An S&P Global survey of purchasing managers last week showed a bigger-than-expected slowdown in growth for September, although the index remained well above levels for the euro zone.

S&P said some businesses were putting investment and hiring plans on hold until there is clarity about the new Labour government’s tax policy and employment law changes.

Labour has said taxes are likely to have to go up by more than it had planned before July’s election, and it is also due to set out legislation to give greater employment protection to staff with less than two years’ service.

The Lloyds survey’s employment balance fell by 1 point to +36% in September.

The Lloyds survey was based on responses from 1,200 British companies with annual sales of more than 250,000 pounds ($334,325) and was was carried out between Sept. 2 and Sept. 16.

($1 = 0.7478 pounds)

 

(Reporting by David Milliken; Editing by David Holmes)