Business confidence in the UK bounced back to its highest level in five months, finds the latest Lloyds Bank Business Barometer. The hiring intentions of firms have also risen to their highest level since the start of the pandemic, the study finds.
Over half of firms (up six points to 52%) said they expect to increase their staffing levels in the next 12 months, while 14% (down three points from 17%) anticipate a lower headcount. The net balance increased to 38%.
“With hiring intentions reaching their highest level since the end of the furlough scheme there is hope that the easing of supply bottlenecks will alleviate a number of challenges that businesses have been facing and help underpin the UK’s growth in 2022,” says Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking.
The pay pressures also increased in February. Twenty-five per cent of businesses (up three points from 22%) expects pay growth in the next 12 months of between 1% and 2%, while 23% (up three points from 20%) expect pay growth of between 2% and 3%. However, there was a drop of four points and two points respectively for those firms anticipating a pay freeze (7%) or pay rise of between 0% and 1% (8%).
As firms face inflationary challenges, nearly half (down one point to 48%) say the pressure to pass on higher costs, including wage expectations, will see them increase their prices in the coming year. The survey also found that more firms are expecting supply bottlenecks to ease during 2022.
“Ten out of the 12 regions reported a growth in confidence.. indicating that businesses are looking forward with renewed optimism,” says Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking.
The rise in confidence was driven by improvements for both trading prospects and economic optimism. The net balance for trading prospects reached its highest level since the start of the pandemic (up four points to 45%). Optimism for the wider economy rose six points to 43% from 37%, according to the study.
The survey captured responses between 1-15 February, notably before the removal of various COVID-19 restrictions across the UK’s nations.