Confidence of UK firms climbs to 22-year high

BUSINESSES are at their most confident in 22 years, according to a new report, indicating rapid growth and higher investment for the rest of the year,

The latest Business in Britain report, produced by Lloyds, says companies’ optimism is at the highest level since research began in 1992. Currently, 53 percentage points more firms are taking a positive view than taking a negative one.

Firms are even more confident about their orders in the second half of the year, with 61 per cent expecting an increase and only five per cent forecasting a drop.

Projections for capital spending are also positive, with a third of firms expecting to raise investment over the next six months, and only 11 per cent suggesting they will cut back. The net balance of firms planning to invest more has now been rising for five quarters, according to Lloyds.

“Sentiment is at historically record highs and hence there is a healthy appetite to invest as businesses are much more confident about their future trading prospects,” said Trevor Williams, Lloyds’ chief economist.

A net balance of 22 per cent of firms are also planning to hire more staff – up from a balance of just five per cent three months ago.

The strong intentions to boost hiring come even after the rapid drop in unemployment so far; the rate of joblessness was 6.6 per cent in the three months to April, down from 7.8 per cent in the same period a year ago.

The figures come after GfK’s latest survey of consumer confidence, which indicated the strongest optimism among the public since 2005.

However, the Lloyds survey does show at least one downside to the recovery; the net balance of 36 per cent of firms are reporting a difficulty in hiring skilled workers. It is the fourth quarterly increase for that figure. The proportion stands below the survey’s long term average of 47 per cent.

Related articles