The Lloyds Bank Commercial Banking Business Barometer revealed this month that overall business confidence improved for the third consecutive month by 8 percentage points to -14%. However, this figure still falls below the historical long-term average. Isabella Colletta reports
The Barometer, which measured UK businesses between 3rd to 17th August, revealed that both trading prospects for the next year and economic optimism rose to -14%. The 9-percentage point rise in trading prospects was the largest monthly increase measured in the past 3 years.
Overall 62% of firms reported a negative impact on demand, with the manufacturing (71%) and retail (64%) sectors reporting the largest number of firms facing negative impact on demand. The Barometer also demonstrates that government financial aid continues to be vital in the wake of the pandemic. Approximately 33% of businesses reported having no employees on the furlough scheme and only 18% of firms using the Coronavirus Job Retention scheme expect to retain all staff members.
Firms hiring intentions improved in the recent month, rising by 3 percentage points to -20%. However, a third of businesses expect a pay freeze at 33%, which is down 3 percentage points from July but still above the 14% recorded at the beginning of 2020.
Rob Marshall, Managing Director at WorkLife by OpenMoney, commented on the Barometer’s findings and how employees can support their staff during this time. He said: “After an extremely challenging few months, it’s great to see another tentative increase in business confidence. But with the numbers sitting way below the historic average, we cannot ignore the fact that many continue to struggle – with smaller businesses bearing the brunt. And things aren’t looking much rosier for their workers, with countless people facing cuts to pay or hours as their employer strives to stay afloat.
“For those being forced to take such measures, it’s vital they are looking at additional ways to support these employees, such as incorporating free financial advice or mental health support into their benefits package. Even simple things like discounted shopping vouchers can be a huge help to people in times like these.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain. Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base, which will hopefully continue over the coming months.”