Business confidence in the UK took a dip in September, falling to 36%, according to the Lloyds Banking Group. This marks a decline of five points from the 18-month high of 41% recorded in August. The decrease can be attributed to a decrease in economic optimism and trading prospects for the upcoming year.
While confidence levels have fallen, they still remain higher than the first three months of 2023, which had a confidence level of 20%. However, fewer businesses are anticipating stronger trading activity in the next 12 months, as 52% of firms reported weaker prospects, compared to only 11% predicting weaker outcomes. This resulted in the net balance falling to 41%, down from 46% in August.
Optimism about the wider economy also saw a reduction, with 51% of firms reporting greater optimism, down four points from the previous month. Conversely, 21% of firms were less optimistic, up two points. The net balance saw a decrease of six points, reaching 30%. Nonetheless, this is still the third highest level of optimism in 2023.
Despite the recent decrease, overall confidence levels in the United Kingdom are still higher than the 22-year average of 28%. This reflects a trend of increasing confidence throughout the year, with monthly rises generally surpassing subsequent falls.
Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking, emphasized the importance of looking at the wider trend in the data, which paints a different picture compared to a year ago when the economy was struggling. He noted that, when comparing quarterly periods, confidence has steadily risen from 20% in the first quarter to 27% in the third.
While the economic environment remains uncertain due to inflation and interest rate pressures, the decision by the Bank of England to keep interest rates unchanged is likely to boost business sentiment and confidence in the last quarter of the year.
Pricing expectations marginally increased in September, with a one-point rise to 57%. The Barometer indicates that businesses are prioritizing maintaining or increasing their profit margins in response to inflation. The number of firms planning to cut prices dropped to 3%, while the percentage of firms planning to raise prices decreased from 61% to 60%.
For more information on this update, please refer to the source.
Follow crowdfundingmagazine on Instagram: @crowdfundingmagazine_it