UK business confidence slips but remains above average, says Lloyds

(Sharecast News) - Business confidence in the UK weakened before the Budget this month, according to the latest Lloyds Business Barometer on Friday, but remained firmly above the long-term average.

The overall net balance on business confidence - those reporting an increase minus those reporting a decrease - declined eight points to 42%, according to responses from 1,200 businesses collected between 3 and 17 November.

Nevertheless, this was still some 12 points ahead of the long-term average of 30%.

The headline reading is a composite of the net balances for two key areas: firms' confidence in their own trading prospects, which fell nine points to 53%; and their view on the economic outlook compared with three months earlier, which slipped eight points to 31%.

The net balance on hiring intentions remained positive at 39%, though the proportion of firms expecting to increase headcount over the next 12 months eased to 56% from 60%.

At the same time, 35% of firms said they expected to increase wages by at least 3% over the next 12 months, down compared with the 39% who reported pay rises of 3% or more over the past 12 months.

On a more positive note, price pressures have begun to ease, with the net balance of firms planning to lift prices in the coming year falling to 60% - the lowest level since January.

"Business confidence has eased, with trading and economic prospects softening, though both remain above their long-term averages," said Hann -Ju Ho, senior economist at Lloyds Commercial Banking.

"Firms will need to remain adaptable and resilient as we head into the New Year. Many are already thinking ahead and are considering workforce developments such as additional training or upskilling, as well as adopting new technologies."