Business confidence falls to 18-month low

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The Independent Online

Confidence among Britain's businesses has slumped to an 18-month low, raising the prospect of weaker growth in the new year, according to new research by Lloyds Bank Corporate Markets.

The monthly snapshot of business sentiment showed that 31 per cent of businesses were feeling more pessimistic in November than three months ago; 37 per cent were feeling more optimistic, taking the overall balance to 6 per cent – the lowest since March last year.

Some 26 per cent of respondents said their feelings on the economy had remained unchanged in the past three months.

The survey also showed that services firms were suffering the most from falling confidence amid worries about weak domestic demand. Confidence among distribution firms, which includes retailers, also fell back ahead of the key Christmas trading period.

Trevor Williams, the chief economist at Lloyds Bank Corporate Markets, said the figures gave a glimpse of what to expect next year.

"Subdued domestic demand is still affecting confidence levels across the regions and sectors, especially those less open to opportunities in the overseas markets," he said. "Businesses are probably expecting to find it tougher to grow exports and may be less willing to commit to new investment.

"As a result, growth is likely to weaken in early 2011 from currently strong levels," he added.

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