Business Confidence in the UK Plummets to Lowest Level of 2024

Forexl - Confidence in the UK business sector fell to its lowest level in December 2024, but as employers became somewhat more optimistic about the broader economy, data showed a pre-Christmas rise in hiring and wages.

The confidence measure among companies from the Lloyds Bank Business Barometer declined by 2 points to 39%, yet it remained above the long-term average of 29%.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, stated that the decline extends the drop seen since the summer. Ho noted, "The most significant change in this month's results is that the drop in confidence is driven by firms' own commercial expectations. However, there was a more positive atmosphere regarding the overall economy, and as we enter 2025, this could offer some hope if companies continue to trust the economy."

A separate survey indicated that the labor market regained some momentum ahead of the Christmas holiday.

Online job site Adzuna reported that the growth measure for job vacancies increased by 2.3% in November compared to October, partly driven by the logistics sector, reaching the highest increase so far in 2024. Last month, average salaries advertised on Adzuna rose by 6.5% year-on-year, marking the largest increase since April 2021.

Official figures released last week showed an unexpected rapid wage increase of 5.2%, significantly above the approximately 3% rate that the Bank of England considers consistent with stable inflation. However, Andrew Hunter, co-founder of Adzuna, suggested that employment trends are likely to soon reflect the impact of the budget and the slowdown in the economy. Hunter stated, "We are currently seeing a very competitive hiring environment. However, we expect the broader macroeconomic context to start affecting hiring figures in early next year."