UK Business Confidence Drops at a Time of Economic Uncertainty

UK business confidence dropped to its lowest since March 2021 despite some firms expecting an improvement in trading prospects concludes Lloyds Bank Plc's business barometer survey in October.

The survey reported that confidence fell 1 point to 15%. The number of employers expecting to increase staffing levels rose for the first time in five months and almost half of firms also reported a better outlook.

The findings underscore the turmoil in the UK economy after Liz Truss abruptly resigned as prime minister and handed power to Rishi Sunak. The new government has reversed all the tax cuts offered by the old one and is planning a fiscal statement 17th November that will tighten austerity on the public finances.

While confidence has marginally decreased this month, this also comes at a time of great economic uncertainty, said Paul Gordon, managing director for small and medium sized enterprises at Lloyds Bank. As we head into winter months, energy price increases will start to bite, and we are seeing continued pressure on pay expectations.

GBP/USD remains pressured around 1.1600 amid a cautious mood and is currently making some losses in early European trading today.