Lloyds Bank Business Barometer - Optimism regarding the UK economy drops for a third consecutive month

28 August 2015

The Lloyds Bank Business Confidence Barometer ‘monthly snapshot’ for August 2015 shows:

  • Optimism regarding the UK economy drops for a third consecutive month
  • However, business confidence in their own trading prospects edges higher
  • Overall sentiment, combining economic optimism and trading prospects fell to a six-month low to 45 per cent.

Optimism regarding the UK economy dropped for the month of August for the third consecutive month, according to the latest Lloyds Bank Business Confidence Barometer, which tracks 200 firms’ views of their own trading prospects and the wider UK economy. This was driven by a rise in the number of respondents saying they are neutral towards the economy (up to 40 per cent from 19 per cent) and reflects a dip in those citing greater optimism (down from 66 per cent to 50 per cent).

The Barometer’s measure of overall business confidence* fell to a six-month low of 45 per cent, reflecting a fall in firms’ perceptions of prospects for the wider economy and with notable weakness in the industrial sector and amongst larger firms.

Business trading prospects remain resilient
In contrast, firms’ own trading prospects saw a two percentage point increase to 50 per cent. Over half (53 per cent) of firms expect their trading prospects to improve, up 2 percentage points from 51 percent in July, whilst only 3 per cent anticipated a drop in their trading prospects.

Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking said: “The increased uncertainty in the global economy may have contributed to a fall in economic confidence among businesses earlier this month. While we’ve recently seen a sharp rise in financial volatility as signs of an economic slowdown in Asia are becoming apparent, UK companies remain resilient in their own trading prospects, suggesting that current economic activity is holding up.”