Confidence among British businesses has slumped to an eight-month low as firms worry over their prospects, according to a new survey.
The latest Lloyds Bank Business Barometer showed overall business confidence plunged to its lowest level since last September, with a net balance of 27 per cent marking a sharp reversal of the 17-month high seen in April, when it hit 47 per cent.
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The drop came amid growing fears over outlook, with a steep decline in firms expecting stronger business prospects – plunging to 39 per cent from 61 per cent in April.
But the figures came as researcher GfK today revealed an “unexpected uptick” in consumer confidence this month, despite lacklustre wage growth and inflation hitting its highest level in more than three years.
Joe Staton, head of market dynamics at GfK, said: “Stagnant living standards haven’t yet significantly dented consumers’ spirits – when it comes to retail therapy we remain happy to splash the cash as sales jump ahead of expectations.
“Perhaps the real squeeze in living standards is yet to hit home. After years of people paying off debts post-downturn, unsecured borrowing has steadily increased since 2014 reaching record highs this month.”
The Lloyds report, which surveyed about 200 UK firms with turnover above £1 million, also showed that 13 per cent now expect weaker prospects, compared with just 1 per cent last month.
Industrial companies were the most gloomy, with the survey showing sentiment plunged to a net balance of 6 per cent, down from 56 per cent last month.
These concerns look set to hit recruitment, with a net balance of 19 per cent of firms expecting to expand their workforces over the coming year, down from 37 per cent in April.
But the survey showed optimism over the wider economy remains fairly robust, with a net balance of 28 per cent down only moderately on the 34 per cent recorded last month and remaining above the long-term average. This comes despite official figures showing economic growth nearly stalled at 0.2 per cent in the first quarter.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Although we have seen a drop in overall business confidence from last month’s elevated level, it is only slightly below the long-term average.
“The June survey will provide a more complete picture for the quarter, but the results from our survey so far still point to a pick-up in growth after the 0.2 per cent out-turn in the first quarter.”