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UK employers suffer confidence shock in March - Lloyds

UK employers suffer confidence shock in March - Lloyds
UK employers suffer confidence shock in March - Lloyds   -   Copyright  Thomson Reuters 2022
By Reuters

LONDON – Confidence levels among British employers have fallen sharply because of the rise in inflation and the war in Ukraine, according to a survey which also showed more firms expected to increase their prices and staff pay.

The monthly survey by Lloyds Bank published on Thursday showed business confidence fell by 11 points to 33% this month, the biggest month-on-month drop since the start of the COVID-19 pandemic and returning to levels last seen in August 2021.

The share of firms expecting to increase prices in response to the rise in inflation rose three points to 55%.

Hiring expectations fell by seven points but remained strong at 31% and a record 49% of firms expected average pay growth of at least 2% in the next 12 months, an increase of 32 points since March 2021.

The Bank of England is concerned that a surge in inflation to a 30-year high of 6.2% may turn into stubbornly high price growth if it leads to bigger pay demands and widespread price rises for other goods.

The BoE has raised its main interest rate at each of its past three monetary policy meetings and investors expect another increase to 1.0% in May.

The Lloyds survey of 1,200 firms was conducted March 1-15.