What’s going on here?

British business confidence dipped in September after peaking over the summer, according to Lloyds Bank’s latest survey.

What does this mean?

Lloyds Bank’s business barometer, which gauges the difference between positive and negative outlooks among firms, fell by 3 percentage points to +47%, a three-month low. Businesses seem more upbeat about their own prospects than the broader economy, with economic concerns hitting a six-month high. Despite these worries, economic growth is still expected, albeit at a slower pace than in early 2024. Upcoming GDP data is likely to show 0.6% growth in Q2 2024, capping a strong start to the year. However, the Bank of England has revised its Q3 forecast down to 0.3% expansion.

Why should I care?

For markets: Navigating the new normal.

Despite recent dips, business confidence remains relatively high. However, some firms are holding off on investments and hiring until they know more about the new Labour government’s tax policies and employment law changes. The government’s indication that taxes will rise and provide better job security could influence market dynamics, posing both risks and opportunities.

The bigger picture: Global economic shifts loom large.

The UK’s economic growth still outpaces the eurozone despite the slowdown. An S&P Global survey of purchasing managers revealed a larger-than-expected deceleration for September, though the UK index remains ahead of eurozone levels. This context underlines the broader challenges of navigating an economy marked by post-pandemic recovery and evolving government policies.