Business confidence drops, but remains above average

Recent data shows that business confidence dropped significantly during March, however, it still remained above the long-term average.

The latest Lloyds Bank Business Barometer also revealed that hiring intentions were more downbeat, but remain higher than the start of the year (29%).

Nearly half of firms (49%, down from 52%), expect to increase their headcount in the next 12 months, while 18% (up from 14%) expect to reduce their numbers.

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, commented on the findings, “March’s data shows UK businesses are facing significant challenges from the impact of Russia’s invasion of Ukraine in increasing economic uncertainty and ongoing inflationary pressures. Following encouraging improvements at the start of the year, March’s fall in confidence is therefore disappointing, but not surprising.

“There are positives with the fact that confidence remains above the long-term average and it appears for now that growth will moderate. But it is difficult to gauge what the full impact will be and therefore businesses have become more cautious.”

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, added, “There is little doubt that businesses across all sectors are being impacted by the current geo-political and financial situations. Businesses that were beginning to see green shoots are now having to reconsider their approach and adapt to a new set of challenges.

“It is yet to be known whether the changes to the National Insurance threshold and business rates for the tourism, hospitality and leisure sectors announced by the Chancellor will help these consumer facing businesses and it will be interesting to see how they respond to next month’s survey.”

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