Confidence at four-year high as Covid curbs lifted for firms

BUSINESS confidence has risen to its highest level in more than four years as looser Covid restrictions allow the economy to recover from the pandemic.

British companies are also more optimistic about what is in store for the economy over the next 12 months, with a record number planning to increase salaries, according to the Lloyds Bank Business Barometer survey.

Hann-ju Ho, senior economist at Lloyds, said: “This tells a positive story about the country’s economic recovery. This confidence is driven by the continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.”

Construction, manufacturing and services were the sectors that recorded the biggest increases in confidence, while economic optimism rose for the first time in three months.

Staff shortages remain a challenge, however, and there is still much uncertainty about inflation and the effect price rises could have on consumers and the wider economy.

Almost half of all the companies surveyed by Lloyds said they expected to raise prices for goods and services over the next year. That was the highest proportion recorded by the survey since December 2017.

Many businesses also planned to increase salaries by at least 2pc over the next 12 months.

Gareth Oakley, managing director for business banking at Lloyds, said: “It is clear there is still some level of uncertainty on inflation and the impact of price pressures, but with further boosts to confidence in the services, manufacturing and construction sectors we can be hopeful that demand across all sectors will drive consumption throughout the rest of the year.”

Meanwhile, business confidence in the eurozone slipped in August for the first time this year as supply disruptions and rising Covid cases risk dampening the recovery.

Sentiment fell in the services and industry sectors and among consumers, according to data from the European Commission.

A shortage of raw materials, spiralling costs and transportation bottlenecks are disrupting manufacturing, while rising infection rates have left many predicting that fresh restrictions will be imposed.

Industry order books deteriorated in August, leaving businesses less positive about future demand.