UPDATE: UK business confidence has just slipped in January 2024, with serious concerns about the global economy weighing heavily on sentiment. The latest survey from Lloyds reveals a decline in confidence, marking a net balance of +44%, down from +47% in December. This shift signals urgent challenges for British firms amid rising geopolitical tensions.
The survey, conducted between January 5 and January 20, highlights a stark drop in economic optimism, which plummeted 14 points to +28%, the lowest level in a year. While businesses report improved expectations for their own operations, the broader economic outlook has taken a hit, reflecting growing unease over global conditions.
During this period, U.S. President Donald Trump threatened new tariffs on the UK and European nations opposing his Greenland stance, intensifying fears among UK businesses. Despite these challenges, firms are exhibiting resilience; expectations for their own trading prospects rose by seven points to +59%, the highest in three months, according to Lloyds.
The survey also indicates a potential rebound in the labour market, with hiring plans showing the first improvement in three months. Over 20% of firms now anticipate wage increases of 4% or more—the highest proportion in five months—suggesting ongoing pressures despite the overall dip in confidence.
Lloyds reports that while confidence remains stronger than a year ago and above its long-run average of +30%, it has fallen from mid-year highs when inflation concerns eased. The looming uncertainty surrounding potential tax rises in the upcoming budget delivered by Finance Minister Rachel Reeves adds further pressure.
The contrasting outlook between firm-level optimism and wider economic caution illustrates businesses’ ability to navigate external risks while focusing on growth. This data is crucial for policymakers and markets, indicating a UK economy that remains resilient at the micro level but increasingly sensitive to global and political headwinds.
As businesses brace for potentially turbulent times ahead, the situation underscores the urgent need for strategic planning and adaptability in an unpredictable economic landscape. Keep an eye on further developments as this story unfolds.
