The recent slump in business confidence is showing signs of improvement, new figures suggest.
According to the Lloyds TSB business barometer, the balance of firms feeling more, rather than less, confident about the UK economy fell by just 1% between December and January.
Lloyds TSB said that although this indicates a fifth consecutive monthly decline in confidence, ‘it also indicates a welcome stabilisation’.
In the service sector 64% of businesses expect an increase in their own activity during 2008, compared with 28% that forecast trading to remain constant. Only 3% expect a fall.
Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: “This survey was conducted before last week’s MPC base rate cut so the slowdown in pessimism may improve further once the effect of the cut takes hold.
“It’s encouraging that confidence in the service sector has risen, given that it is arguably the most exposed to the credit squeeze and most prone to a slowdown.”
Williams said it was surprising that overall, firms were not more pessimistic given the depth of concern over falling house prices and consumer spending.
He added: “This suggests there may be pockets of continuing economic growth, which means the assertions of an impending recession are way off mark and continued, albeit slower, growth is more likely.”
© Crimson Business Ltd. 2008
