Confidence among UK businesses reached its lowest point in four months this October, as they took a prudent approach ahead of the budget presentation by the newly appointed Chancellor, Rachel Reeves. This sentiment was captured in a survey released Monday.
The Lloyds Business Barometer, which encompassed feedback from 1,200 companies between October 1-15, recorded a three-point drop to 44 percent—the lowest since June. Chancellor Reeves is scheduled to present the government’s inaugural budget on October 30.
"Despite the slight reduction in overall business confidence in October, it's important to note this follows a significant period of optimism, with sentiments still above historical norms," explained Hann-Ju Ho, an economist at Lloyds Bank. "It’s promising that many businesses remain assured about their own trading prospects, and the uptick in hiring intentions suggests a growing interest among employers to expand their workforce."
While business confidence declined for the second month in a row, it stayed above the survey's long-term average of 29 percent.
This recent dip in confidence was attributed to simultaneous reductions in companies' trading prospects and economic optimism, as indicated in the survey.
Economic optimism continued its downward trend, dropping three points to 35 percent—its lowest since March.
The net balance of firms' trading prospects saw a decrease in October, falling to 53 percent after an increase the previous month, marking the lowest figure since June. Nonetheless, businesses remained hopeful for robust output growth over the next year, according to the survey.
Despite the dip in sentiment, hiring intentions among UK businesses saw a slight improvement, the report noted. The net balance rose by one point to 37 percent, counterbalancing the decline observed in September.
Although expectations for wages over the next 12 months softened slightly in October, they still exceeded pre-pandemic levels. Additionally, price expectations decreased, partially undoing the rise seen the previous month.
Within various economic sectors, trading prospects declined in manufacturing, retail, and services, though they improved in construction.
