British Businesses Confident in Face of Slowing U.K. Economy

(Bloomberg) -- British businesses are feeling upbeat about the economy, according to a Lloyds Bank survey.

Just over half said they were more optimistic about the economy than they were three months ago. Nevertheless, the balance expecting stronger trading fell, the report published Monday showed.

The survey of 1,200 companies was carried out between March 29 and April 18. The pound strengthened in that period, climbing to its highest level against the dollar since the Brexit vote, and inflation slowed to 2.5 percent in March.

However, retail and manufacturing reports were less positive, and developments since the survey may point to confidence being short-lived. Figures Friday showed the economy registered its worst performance since the end of 2012 in the first quarter.

The retail sector had the weakest level of confidence, Lloyds said, as adverse weather in the first quarter hit sales.

“The uplift in economic optimism this month, against a backdrop of slightly eroding business prospects, is a positive move and may well be reflected in sterling returning to pre-Brexit levels against the dollar,’ said Hann-Ju Ho, senior economist at Lloyds Commerical Banking. “It will be interesting to see if that trend continues.”

A separate survey from the Confederation of British Industry Sunday showed private-sector output rising at its slowest pace since 2016 in the latest three months, with consumer firms “particularly weak,” reflecting the pressure on incomes from inflation. Still, an across-the-board pickup is predicted.

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