British business confidence fell to its lowest level since 2024 in December but employers were slightly more optimistic about the wider economy, according to a survey published on Monday, while separate data showed a pre-Christmas rise in hiring and wages.
The Lloyds Bank Business Barometer measure of confidence among companies fell 2 points to 39%, still above its long-term average of 29%.
Han-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said the decline was down from the summer.
“The main difference in this month’s results is that the decline in confidence is driven by firms’ own business prospects,” he said. “However, there was more positivity in terms of the wider economy and, going into 2025, this offers some hope as companies continue to feel confident about the economy.”
The UK economy shrank in September and October – the first consecutive monthly decline in output since the COVID-19 pandemic – as employers worried about the new government’s first budget announced on 30 October.
The Bank of England last week forecast zero growth in gross domestic product in the final quarter of 2024 but it put interest rates on hold pending more clarity on the impact on inflation from the Budget’s tax hike for employers.
The Lloyds gauge of price intentions rose slightly in December and remained above its long-term average.
A separate survey suggested the labor market was regaining some of its momentum in the run-up to the Christmas holiday.
Online jobs website Adzuna said its measure of growth in vacancies in November was the largest increase so far in 2024, up 2.3% from October, driven by the logistics sector.
The average salary advertised on Adzuna last month rose by 6.5% from a year earlier, the biggest increase since April 2021.
Official figures last week showed unexpectedly fast wage growth in the economy of 5.2%, well above the rate of around 3% that the BoE sees as consistent with stable inflation.
However, Edjuna co-founder Andrew Hunter said employment trends are likely to soon reflect the effects of the budget and the slowdown in the economy.
“Right now we’re seeing a very competitive recruiting landscape,” Hunter said. “However we expect the broader macroeconomic environment to begin to affect hiring figures early next year.”
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