UK business confidence rebounds to a 13-month high: Lloyds

UK business confidence rose to a 13-month high in June as firms shrugged off another Bank of England (BOE) interest-rate increase, a survey by Lloyds Banking Group found.

Lloyds’ Business Barometer showed optimism increasing 9 percentage points to 37 per cent, rebounding from a dip in May. Executives said they were more confident about their own trading prospects and the wider economy.

The poll of 1,200 firms was conducted from Jun 1 to Jun 15, weeks after the BOE delivered a 12th consecutive rate hike in a bid to tame inflation. On Jun 22, however, the BOE stepped up its campaign with a larger-than-expected half-point rise to 5 per cent, the highest since 2008.

“Interest-rate rises and cost pressures are still felt by many and we await to see the impact of the latest 50 basis-point rise in the base rate,” said Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking.

Increased confidence was reported across regions and sectors, and firms expected to keep hiring, Lloyds said.

Wage expectations stabilised, in a sign that the red-hot labour market worrying the BOE may be cooling. However, they remain higher than at the start of the year and elevated relative to pre-pandemic levels. BLOOMBERG