UK Companies’ confidence at two-year high

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Business confidence has hit its highest level for two and a half years, a survey suggests.

The latest Lloyds Bank Business Barometer found that overall business confidence had increased by 14 percentage points to 29 per cent in April, beating the long-term average of 28 per cent.

Both business and consumer confidence are being bolstered by the easing of lockdown and the success of the vaccination programme. Lloyds said that companies were feeling more hopeful about their trading prospects, with the relevant sub-index rising by 13 percentage points to 25 per cent — the biggest monthly rise for nearly four years. Optimism about the economy rose by 15 percentage points to 32 per cent.

Fewer than half of the companies surveyed said that demand was being hit by the pandemic. In contrast, a year ago, at the start of lockdown, three quarters of companies reported a negative impact. More than half, 56 per cent, of companies said that they were operating above 50 per cent capacity, up from 33 per cent a year ago.

Businesses are responding to the more positive outlook by expanding their workforces. The index for staffing levels doubled to 8 per cent. A quarter of businesses said they expected to make average pay increases of 2 per cent this year, up from 17 per cent in March.

Hann-Ju Ho, at Lloyds Commercial Banking, said: “[This] tells us a positive story about the UK’s continued economic recovery and leaves us optimistic about the road ahead. While uncertainties remain . . . this month’s improvement in sentiment reflects a further easing of Covid-19 restrictions.”