UK business morale hits 11-month high

UK business confidence reached a near one-year high in April, a survey showed on Friday, although prices were still forecast to rise.

Lloyds Bank said that according to its latest Business Barometer, confidence rose one point to 33% in April, the highest level since May 2022. It also remains above the long-term average of 28%.

Supporting the increased optimism was growing confidence in the wider economy, up five points at 28%, following an 11-point jump in March. Employment intentions also continued to improve, rising for the fifth consecutive month, up three points at 27%.

Costs were expected to continuing rising, however, with the number of companies anticipating average pay to increase by at least 3% rising to 27%, the highest level since September 2022, while 61% said they expected to increase prices in the coming year.

Trading prospects also softened marginally, with the net balance easing one point to 39%.

Hann-Ju Ho, senior economist at Lloyds Bank commercial banking, said: "The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.

"The revival in the demand for labour may account for the modest uptick in wage expectations for the next 12 months."

Victoria Scholar, head of investment at Interactive Investor, said: "Wage growth hit a seven-month high, while more than half of companies surveyed plan to increase prices over the next year, raising the risk that inflation could linger for longer, despite a reduction in cost pressures."

A total of 1,200 businesses with annual turnover of more than £250,000 were surveyed between 3 and 16 April.