Written by: Keith Tully
Published: 4th September 2017
Confidence among British companies slid back during August to a level not seen for 12 months, according to a recent survey.
The latest figures from Lloyds Bank reflect the views of businesses about their own prospects and those of the economy as a whole and apparently point to a waning of confidence throughout the country.
According to the bank, economic optimism fell from 17 per cent to just 5 per cent during August, which puts it at the lowest level recorded since June 2016 and the second lowest level since 2012.
The share of businesses reporting higher confidence in their own prospects fell by 7 per cent to 38 per cent in August, while the proportion with lower economic optimism increased from 21 per cent to 28 per cent.
Optimism among manufacturing and construction companies dropped by 10 per cent to reach a 3-month low but positive sentiment fell most markedly in the consumer services sector where it was recorded at a 14-month low.
Nevertheless, the Lloyds Bank figures suggest that appetite for hiring new people is steadily rising among businesses, with 33 per cent of companies apparently expecting to increase their head count in the coming weeks or months.
“The August report shows that overall business confidence has fallen to the lowest level for 12 months, with sentiment weakest among consumer-facing firms,” said Hann-Ju Ho, a senior economist with Lloyds Bank Commercial Banking.
“While confidence overall is now just under the long term average, firms’ hiring plans remain robust.”
A total of 200 businesses, all with turnovers worth in excess of £1 million annually, were polled for the Lloyds Bank survey.
Uncertainty around the details of how Britain’s exit from the European Union will unfold have been widely cited as the primary reason why business confidence has been dampened in recent months.
Official figures showed that the UK economy grew at a rate of 0.3 per cent during the three months to the end of June, which was up by just 0.1 per cent compared with the previous quarter.
Some businesses are currently finding their sales levels and profit-making capacities hindered by a combination of high inflation and the relatively low value of the pound.