Sharp dip in UK business confidence in economic growth
Business confidence in the economy plunged in May as the UK companies strived to come to terms with developments in the crisis-hit eurozone, a survey report released Wednesday revealed.
The Lloyds Bank Wholesale Banking and Markets Business Barometer sharply fell by 47 points from a positive reading of 26 per cent in April to minus 21 per cent in May, indicating a sizeable increase in respondents holding negative sentiments about the economy.
The negative sentiments rose with the eurozone crisis showing no signs of abating and instead there are signs of the crisis escalating with concerns growing over the health of the Spanish economy and the possibility of Greece exiting the euro.
Trevor Williams, chief economist at Lloyds Bank Wholesale Banking Markets, said: "The renewed concern around the eurozone is clearly having an impact on businesses' sentiment towards prospects for the UK economy and, to a lesser extent, to their own prospects."
Despite the sharp dip in sentiment about the broader economy, the business sentiment of companies about their own growth prospects did not fall in similar fashion.
The businesses confidence about growth prospects fell eight per cent from April levels to 35 per cent, which is higher than levels during the worst of the financial crisis in 2008-09, Lloyds said.
The survey data suggest an underlying 0.2% growth in gross domestic product (GDP) between April and June, Lloyds said.
The deepening troubles in the eurozone have also hit confidence on stock markets, particularly banking stocks.
Biggest declines in confidence occurred in the North and Midlands, and in the retail and distribution sectors.
Another household spending survey by Visa showed consumer sentiments have also been affected with flat growth in buying pattern compared with the previous month. The only thing to be cheered about is there was no dip in consumer spending unlike the 2.1per cent decline in April after a 0.3 per cent rise in March.
On an annual measure, household spending fell by 1.6pc in May, although the decline was the lowest in five months.
Steve Perry, commercial director at Visa Europe, said: "Despite hopes that consumer spending would rebound after a dismal April, the UK expenditure index has revealed that consumer spending in May remained flat. Indeed, the underlying trend is still weak signifying the struggle that consumers face."
Source: Britain News.Net
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