UK business confidence weakens as doubts grow over wider economy

Overview of Business Confidence in the UK

LONDON, Jan 30 (Reuters) - British business confidence has weakened this month after executives' view of the global economic outlook declined to its darkest in a year, a survey by Lloyds showed on Friday.

Survey Findings and Economic Outlook

Lloyds' business barometer slipped to a net balance of +44% in January from +47% in December, driven by a 14-point drop in businesses' net economic optimism to a one-year low of +28%.

During the January 5 to January 20 survey period, President Donald Trump threatened to impose tariffs on Britain and other European countries which opposed his efforts to bring Greenland under U.S. control.

However, businesses' expectations for their own activity rose by 7 points to a three-month high of +59%, mirroring an upturn in other surveys such as last week's S&P Purchasing Managers' Index for January .

Hiring and Wage Growth Expectations

Hiring plans strengthened for the first time in three months and wage growth expectation also rose. Just over one in five firms expected salaries to grow by 4% or more, the largest proportion in five months.

Comparative Analysis with Previous Year

"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," Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said.

Business confidence is stronger than a year ago and above its long-run average of +30%, Lloyds said, though it is below levels seen in the middle of the year, before concerns about renewed tax rises in finance minister Rachel Reeves' annual budget began to weigh on sentiment.

The survey was based on responses from 1,200 businesses with annual sales of at least 250,000 pounds ($343,750).

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(Reporting by David Milliken, editing by Andy Bruce)