UK business confidence drops but still above crisis lows, Lloyds finds

UK business confidence and economic optimism fell to a four-year low in the week after the Brexit referendum but still well off the lows of 2008, according to a survey by Lloyds Bank that mirrored recent findings on consumer confidence.

Lloyds' monthly Business Barometer survey found business confidence levels fell by 26 points to 6% in the past month, its lowest in over four years but above the lows seen during the global financial crisis.

The net balance of businesses' opinion about business activity prospects fell to 23% from 38%, the lowest level since December 2011, hiring plans appeared solid, with a net balance of firms expecting to raise their staffing levels in the coming year creeping up to 26% from 24%.

Relative optimism was also apparent in the industrial sector as the recent fall in the value of the pound will make exporting easier, with confidence falling less than in other sectors. Consumer services fell the most, down to a -13% balance of opinion from 19%.

Lloyds said the survey, which was conducted from 24-29 June with around 200 companies with turnover above £1m from all sectors and regions of the UK, revealed a bigger fall in economic optimism, which it has found tends to react more firmly to events than business activity prospects.

The net balance for economic optimism fell to -11% from 26%, the first negative outturn since July 2012.

“Our June survey shows an unsurprising downward shift in confidence however there are positive signs in certain sectors," said Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking.

"Furthermore, hiring plans have remained stable which is a good indication of longer term resilience.”

Last week, a survey by YouGov and the Centre for Economics and Business Research found consumer confidence in the UK has collapsed in the days since the referendum result.

Their consumer confidence index, which measures people’s economic sentiment on a daily basis, has dropped to 104.3 from 111.9 in the first three weeks of June.