Lloyds - Confidence in the UK economy highest in 11 years

PUBLISHED: 02 Oct 2013 @ 11:57 | Comments (0) |

Banking on a booming economy?

Business confidence in the economy increased to the highest level since 2002 according to the Lloyds Bank (LSE:LLOY) Business Confidence Barometer. More than two thirds (68 per cent) of companies surveyed said that they were more optimistic about how the economy would fare compared with three months ago.

The net balance of businesses that are optimistic about economic prospects – which weighs up the percentage of firms that are now more optimistic than they were three months ago against those that are more negative – increased by 3 points to 57 per cent in September. Further analysis shows a five percentage point increase, to 68 per cent, in the number of businesses that are more optimistic about the economy than they were three months ago. Only 11 per cent of businesses said they were less hopeful about the economy, which is a marginal increase from August when nine per cent of businesses were pessimistic about the economy.

Businesses had a marginal drop in confidence towards their own trading prospects over the next twelve months. Just under two thirds (59 per cent) of firms said that they expect trading prospects to improve, which is unchanged from August, while there was a slight increase of one point to four per cent that expected a fall in their trading prospects. The overall net balance of 55 per cent is down one point from last month. However despite the drop, the quarterly average is at the strongest level since late 2007, prior to the height of the global financial crisis.

Taken together, both indices indicate that economic growth could accelerate to around 0.8 per cent quarter-on-quarter in Q3 2013 and preliminary indications point to a 1.0 per cent quarter-on-quarter growth in Q4 2013. If subsequently this is reflected in official statistics, this may sustain the challenges that the Bank of England Monetary Policy Committee face in implementing its forward guidance policy.

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