LONDON — British businesses are rapidly losing confidence both for their prospects and those of the wider economy, and are more pessimistic than they have been in a year, according to the latest business confidence survey from Lloyds Bank.
Lloyds’ Business Barometer for August found that business confidence fell by 13 points to just 17%, the lowest level since August last year.
The number of businesses saying they felt more confident than last month also fell, dropping seven points to 38%.
Things are particularly bad in the consumer services sector, which has been hit with trouble in recent months as surging inflation stops people spending on discretionary items. It dropped to a 14-month low of 3%.
Not only are businesses less confident overall, but they are also losing faith in the health of the broader economy, with economic optimism falling to just 5%, the second worst single month performance in the survey since 2012, and worst since June 2016, the month Britain voted to leave the European Union.
Britain’s economy has slowed substantially in 2017. GDP grew just 0.3% in the second quarter of 2017, with growth in the first three months even less impressive, leaving the UK languishing as the slowest growing economy in the G7.
“The August report shows that overall business confidence has fallen to the lowest level for 12 months, with sentiment weakest among consumer-facing firms,” Hann-Ju Ho, a senior economist with the bank said.
The chart below shows the softening of economic momentum in 2017 so far:
Lloyds’ barometer comes just over a week after a survey from the Recruitment and Employment Confederation (REC) showed similar concerns.
A survey of 601 employers by the REC found 31% of employers now expect the economy to worsen, and 28% expect it to improve.
REC chief executive Kevin Green said issues including access to labour, Brexit negotiations, and political uncertainty are “creating nervousness.”
“The jobs market continues to do well despite growing uncertainty. However, this drop in employer confidence should raise a red flag,” Green said.