British Business Confidence Declines Slightly

By David Milliken
LONDON (Reuters) – British business confidence has decreased slightly this month after reaching an eight-year high in July and August. This decline comes as concerns about the broader economic outlook rose to a six-month high, according to a survey from Lloyds Bank.

The overall business barometer from Lloyds, which measures the difference between positive and negative business outlooks, fell by 3 percentage points to +47%, marking a three-month low. Businesses remain more optimistic about their own prospects than the overall economy.

Lloyds economist Hann-Ju Ho stated, “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.”

Upcoming official GDP data is expected to confirm that Britain’s economy grew by 0.6% in the second quarter of 2024, following a stronger-than-expected recovery from a shallow recession in the first half of the year.

Earlier this month, the Bank of England revised its growth forecast for Q3, predicting a slower quarterly expansion of 0.3%, aligning with Britain’s long-term growth rate.

An S&P Global survey of purchasing managers last week indicated a larger-than-expected slowdown in growth for September, although the index remains robust compared to the euro zone.

S&P noted that some businesses are postponing investment and hiring plans until clear guidance is provided on the new Labour government’s tax policies and changes to employment laws. Labour has suggested that taxes may need to be increased more than initially anticipated post-July’s election and plans to introduce legislation enhancing employment protections for staff with less than two years’ service.

The employment balance in the Lloyds survey dropped by 1 point to +36% in September. The survey itself was based on responses from 1,200 British companies with annual sales exceeding £250,000 ($334,325), conducted between September 2 and September 16.

($1 = 0.7478 pounds)