A recent survey has revealed that optimism regarding the wider economy increased by 2 points to 25% in July, with overall business confidence remaining the same at 29%.
The latest Business Barometer from Lloyds Bank Commercial Banking also shows an improvement in firms’ assessment of the impact of Brexit on their business prospects. The net balance of 3% was up from 1% in June. Overall, 31% of firms thought that leaving the EU is having a positive impact on their business activity, while 28% said that it was having a negative effect.
At the time, the Bank of England’s decision to raise interest rates for just the second time since 2007 hadn’t yet been disclosed, however, it seems that the majority of businesses believed that this was likely to happen.
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I want to be a contractorFor example, 71% of firms expected the Bank of England to raise rates this year, compared with 14% that anticipated no rate rise. Nearly a quarter (23%) of firms said that official interest rates at 1% would have a ‘significant negative’ impact on their business. That rises cumulatively to 54% with interest rates at 1.5% and 75% if rates increase to 2%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking commented, “The uplift in economic optimism this month illustrates a slightly more positive view on the balance of risks for the UK economy, despite the expected interest rate rise this year. However, with the net balance of stronger business activity declining slightly, it will be interesting to see if the overall business confidence measure shifts from its steady position towards the end of the year.”
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