Dec 23 2024:Â Business confidence in the UK declined to its lowest level of 2024 in December, according to a survey released on Monday. Despite this, employers expressed increased optimism about the broader economy. Separate data also highlighted a rise in hiring activity and wage growth ahead of the Christmas season.
The Lloyds Bank Business Barometer showed business confidence dropping by two points to 39%, though it remains above the long-term average of 29%. Hann-Ju Ho, a senior economist at Lloyds Bank Commercial Banking, noted that this marks a continued decline since the summer.
“The decrease in confidence this month stems largely from firms’ outlook on their own trading prospects,” Ho said. “However, increased positivity about the wider economy heading into 2025 offers hope if businesses maintain confidence in broader economic conditions.”
The UK economy contracted in September and October, marking the first consecutive monthly declines in output since the COVID-19 pandemic. Concerns about the government’s budget, announced on October 30, contributed to these contractions.
While the Bank of England (BoE) recently forecast zero GDP growth for the final quarter of 2024, it kept interest rates unchanged, awaiting more clarity on how employer tax increases from the budget will affect inflation. The Lloyds survey also reported a slight rise in price expectations, which remain well above the long-term average.
Labour Market Sees Pre-Christmas Boost
A separate survey by online jobs platform Adzuna revealed that the labor market gained momentum in the lead-up to the holidays. Vacancies in November grew by 2.3% from October, the largest monthly increase in 2024, driven partly by demand in the logistics sector.
Average advertised salaries on Adzuna rose by 6.5% year-on-year in November, marking the fastest growth since April 2021. Official figures last week showed an unexpectedly high pay growth rate of 5.2% across the economy, significantly above the 3% level the BoE considers consistent with stable inflation.
Andrew Hunter, co-founder of Adzuna, warned that these employment trends might shift soon due to economic headwinds.
“Currently, hiring remains highly competitive,” Hunter said. “However, the broader economic slowdown and the effects of the budget could begin impacting job figures early next year.”
