UK business confidence hits a four-year high

Business confidence in the UK is at the highest level for more than four years according to a new survey, with nine of the 12 UK regions expecting growth.

The monthly Lloyds Business Barometer research highlights the performance of businesses with a turnover of £1 million or more across the UK and shows confidence in the construction, manufacturing and services sectors rising sharply.

The continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules were cited as reasons for the growth in confidence.

The survey for August showed confidence is at its highest level since 2017, with more than a third at 36 per cent more optimistic about the economy, while levels of pay are expected to rise by at least two per cent and as high as three per cent.

It is a further boost for the economy, although the survey suggested that staff shortages are still a concern and likely to push wages up.

Optimism has been driven by increased trading figures, now at a three year high and expectation of even stronger trading in the year ahead.

The greatest month on month increase came in services with an eight per cent boost to 36 per cent, while manufacturing and construction also picked up (both up seven points to 40 per cent).

Almost half of companies (44 per cent up five points from 39 per cent in July) are expecting to charge higher prices over the next year.

Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: “Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery. This confidence is driven by the continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.

“Staff shortages remain a challenge, but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.”

Of the 12   UK regions and nations surveyed, in the North West, East of England and North East, confidence was at its highest since the survey sample was expanded in 2018.

Increases were also recorded for Scotland (34 per cent), the South East (32 per cent), the South West (37 per cent) and Wales (19 per cent), although the level in Wales was still the second lowest in the UK.

Gareth Oakley, managing director for Business Banking, Lloyds Bank, said: “It is clear there is still some level of uncertainty on inflation and the impact of price pressures, but with further boosts to confidence in the services, manufacturing and construction sectors we can be hopeful that demand across all sectors will drive consumption throughout the rest of the year.”