UK businesses scale back pay plans despite higher inflation: Lloyds

[LONDON] British businesses are scaling back plans for pay rises and hiring, but almost half intend to increase the prices they charge customers as they seek to manage rapidly rising costs, a survey showed on Monday.

The figures from a monthly Lloyds Bank survey will give mixed signals to the Bank of England on the persistence of inflation pressures - and the extent to which they will hamper growth - as it considers a widely expected rate rise this week.

A record 49 per cent of the 1,200 businesses surveyed between Jan 4 and Jan 18 said they expected to raise prices, up from 45 per cent in December.

But the proportion expecting to raise pay by 2 per cent - well below the current 5.4 per cent rate of inflation - fell to a five-month low of 41 per cent from 48 per cent in December.

The number planning pay rises of 3 per cent fell to 21 per cent from 26 per cent and those share of those planning 4 per cent pay rises dropped to 12 per cent from 14 per cent.

"Businesses remain cautious about the pandemic and are facing into challenges from rising cost pressures although many are raising their prices in response," Lloyds Bank economist Hann-Ju Ho said.

Overall confidence slipped from December and hiring intentions were the lowest since August - although 46 per cent of firms still plan to increase their headcount over the next 12 months.

A monthly survey from the Confederation of British Industry on Sunday showed that private-sector growth in the three months to January was the weakest since April, reflecting a big hit to many firms from a wave of Omicron cases in December and January. REUTERS