Inflation pushes UK business confidence again – Lloyds

The City of London’s financial district is seen as people stroll along the south side of the River Thames, London, Britain March 19, 2021. REUTERS/Henry Nicholls/File Photo

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LONDON (Reuters) – Confidence among UK business has fallen to its lowest level since March 2021 as firms worry about rapidly rising inflation, according to a survey released on Wednesday, which also showed wage pressures are rising after a recent rise has stabilized.

Lloyds Bank said its monthly business barometer fell to 16% in August from 25% in July, with companies worrying more about rising prices than about an economic slowdown.

“Business confidence fell for the third straight month as businesses continue to face economic challenges ahead and mounting inflation concerns,” said Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking.

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Wage and price pressures remained high, but there were some more positive points as demand for employees held up and companies reported fewer concerns about staffing levels and the coronavirus pandemic, Ho said.

While 38% of companies expected to increase headcount in the coming year, the proportion expecting a wage increase of at least 3% fell slightly to 26% from 28% in July.

The Bank of England is closely monitoring wage pressures as it considers how far it needs to raise interest rates to erase the risk that the recent 40-year high in inflation will fundamentally change public perceptions of the long-term trajectory.

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writing by William Schomberg; Editing by David Milliken

Our standards: The Thomson Reuters Trust Principles.

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