Confidence among U.K. businesses fell to its lowest in four months in October as they adopted a cautious stance ahead of the first budget presentation by the new chancellor Rachel Reeves later this week, results of a survey showed Monday.
The Lloyds Business Barometer fell three points to 44 percent, the lowest score since June, the survey that covered 1,200 companies between October 1 – 15 revealed.
Chancellor Reeves is set to present the new government’s first budget on October 30.
“While overall business confidence dipped in October, it follows a sustained period of significant optimism, and business sentiment remains above historical levels,” Lloyds Bank economist Hann-Ju Ho said.
“Encouragingly, many businesses remain confident in their own trading prospects, and the increase in hiring intentions suggests more employers want to grow their workforce.”
Business confidence weakened for a second consecutive month but remained above the survey’s long-term average of 29 percent.
The latest decline in confidence was a result of equal falls in firms’ trading prospects and optimism about the economy, the survey said.
Optimism about the economy continued to erode and the corresponding balance fell three points this month to 35 percent, the lowest since March.
The net balance for firms’ trading prospects eased in October after rising in the previous month, to 53 percent, the lowest since June. Businesses continued to look forward to strong output growth for the next twelve months, the survey said.
Despite the weakening in sentiment, hiring intentions among U.K. businesses edged up, the report added. The net balance edged up 1 point to 37 percent, offsetting September’s decline.
Businesses’ pay expectations for the next 12 months eased slightly in October yet remained higher than the pre-pandemic levels. Price expectations also moderated to partially reverse the rise in the previous month.
Among the various economic sectors, trading prospects eroded in manufacturing, retail and services, but improved in construction.
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