LONDON — British businesses are rapidly losing confidence both
for their prospects and those of the wider economy, and are more
pessimistic than they have been in a year, according to the
latest business confidence survey from Lloyds Bank.
Lloyds’ Business Barometer for August found that business
confidence fell by 13 points to just 17%, the lowest level since
August last year.
The number of businesses saying they felt more confident than
last month also fell, dropping seven points to 38%.
Things are particularly bad in the consumer services sector,
has been hit with trouble in recent months as surging inflation
stops people spending on discretionary items. It dropped to a
14-month low of 3%.
Not only are businesses less confident overall, but they are also
losing faith in the health of the broader economy, with economic
optimism falling to just 5%, the second worst single month
performance in the survey since 2012, and worst since June 2016,
the month Britain voted to leave the European Union.
Britain’s economy has slowed substantially in 2017. GDP grew just
0.3% in the second quarter of 2017, with growth in the first
three months even less impressive, leaving
the UK languishing as the slowest growing economy in the G7.
“The August report shows that overall business confidence has
fallen to the lowest level for 12 months, with sentiment weakest
among consumer-facing firms,” Hann-Ju Ho, a senior economist with
the bank said.
The chart below shows the softening of economic momentum in 2017
Lloyds’ barometer comes just over a week
after a survey from the Recruitment and Employment Confederation
(REC) showed similar concerns.
A survey of 601 employers by the REC found 31% of employers now
expect the economy to worsen, and 28% expect it to improve.
REC chief executive Kevin Green said issues including access to
labour, Brexit negotiations, and political uncertainty are
“The jobs market continues to do well despite growing
uncertainty. However, this drop in employer confidence should
raise a red flag,” Green said.