Renewed confidence evident in UK businesses: Lloyds Bank

UK businesses have shown renewed confidence in October, rebounding from a dip in September. Company executives are now looking to increase both prices and hiring, as revealed in a survey that will play a role in the Bank of England's deliberations on interest rates this week.

The Lloyds Bank Business Barometer, which gathers input from approximately 1,200 companies across various sectors and is regularly referenced in the Bank of England's quarterly economic reports, climbed to its second-highest level for 2023 at 39 per cent, up from 36 per cent in the previous month.

Despite this positive shift, the data indicates that businesses are still cautious about protecting their profit margins due to the potential persistence of high interest rates, pressures for wage increases, and the looming prospect of elevated energy prices during the winter season, as highlighted by Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking.

Furthermore, pricing expectations continued to rise for the third consecutive month, reaching a new high for 2023, with 62 per cent of companies intending to raise their prices, while only 3 per cent planned to reduce them. Job market outlook also improved, with 48 per cent of firms anticipating an increase in staffing levels compared to 16 per cent planning job cuts. Expectations for pay increases remained robust.

The survey was conducted between October 2 and October 16.

In light of these developments, the Bank of England is expected to maintain its current interest rates during its upcoming meeting, marking the second consecutive decision to keep rates unchanged after a series of 14 consecutive rate hikes aimed at combating high inflation.

(With Reuters Inputs)