Pre-Budget Lift for Rachel Reeves as UK Business Confidence Rises

Warren Takunda

Summary:

Despite concerns about economy, poll shows optimism about trading prospects at highest level since 2014

Confidence among UK businesses has grown despite anxiety about the state of the economy, in a rare slice of positive news for the chancellor, Rachel Reeves, in the run-up to her autumn budget.

An August poll of UK companies by Lloyds Bank showed that improved sentiment among manufacturers and retailers helped push overall optimism within UK plc up by two percentage points, with 54% of companies now feeling confident in the current environment.

It marked the fourth consecutive monthly increase in overall business sentiment, according to the Lloyds business barometer, driven by a growing number of businesses – roughly 63% – feeling strong about their own trading prospects. On that measurement alone, confidence reached its highest level since 2014.

About half of all businesses now expect to hire more staff in the coming year despite growing costs. The survey found 38% of companies are expecting to have to raise wages by 3% or more, with the vast majority – 83% – saying that higher employment-related costs would have a limited impact on hiring plans.

Overall optimism across the private sector comes despite jitters over the state of the economy, with levels of positive sentiment falling for the first time since the drop seen in April, when Donald Trump’s sweeping tariff announcements prompted fears over the future of global trade. Economic confidence fell three points to 44% this month, Lloyds said, although that remained above the longer-term average of 19%.

However, the fact that business confidence continues to rise amid the economic gloom will be a rare piece of good news for the chancellor, given fears that a fresh round of tax increases – meant to bolster the public finances – could knock confidence and investment across the private sector as companies try to recoup and offset costs. Reeves is expected to announce a date for her autumn budget within days.

“This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy,” Hann-Ju Ho, a senior economist at Lloyds Bank’s commercial banking arm, said. “Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.

“Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months.”

Source: Theguardian

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