Business confidence in the UK hit its lowest point in 2024 during December, as concerns over layoffs and price hikes hindered business growth opportunities. According to the latest Lloyds Business Barometer, business confidence dipped by two points to 39 per cent this month, although it remained above the long-term average of 29 per cent.
“While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs,” commented Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, as reported by City AM.
Despite this, businesses expressed increased positivity about the wider economy, with 55 per cent of respondents feeling more confident. Almost two-thirds of those surveyed anticipated stronger output, though 11 per cent expected less business activity in the new year, leading trading prospects to drop to their lowest level since June.
There were mixed feelings regarding employment, with a slight decrease in companies planning to increase their workforce next year. While 52 per cent of respondents planned to expand their headcount, 19 per cent intended to reduce their workforce next year, marking the highest figure in nine months.
“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be significant for this time of year,” added Ho. Furthermore, more companies are planning to raise their prices next year, posing a challenge to efforts to curb inflation.
Nearly two-thirds of companies, 64%, up from 63% in the previous month, plan to increase prices for goods and services, while only 2% intend to decrease them. Paul Kempster, managing director for relationship management at Lloyds, stated: “The mixed results in trading prospects and economic optimism suggest that while businesses feel they are facing some challenges, there is still some opportunity in regard to the wider economy.”
“Although overall confidence dipped this month, we’re still optimistic that firms’ trading prospects will return to the levels seen earlier this year.”
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