British business morale hits 11-month high in April

British businesses were their most optimistic in nearly a year in April, boosted by growing hopes about the economy, according to a Lloyds Bank survey on Friday that could add to pressure on the Bank of England to keep on raising interest rates.

Lloyds said its Business Barometer gauge of confidence – which measures the difference between respondents who felt more confident or less confident about their trading and economic prospects – rose to 33 per cent from 32 per cent in March, further above its long-running average of 28 per cent.

The outlook of firms’ optimism about the wider economy improved by five points to 28 per cent.

Hann-Ju Ho, senior economist at Lloyds Bank, said the recent increases in business morale indicated positive momentum in Britain’s economy at the start of the second quarter.

Britain has been the slowest among the Group of Seven rich nations to recover from the economic hit caused by the coronavirus pandemic but it has so far defied forecasts that it would fall back into a recession.

However, more than half of companies surveyed by Lloyds intended to raise their prices in the coming 12 months despite easing cost pressures, potentially adding to inflationary pressures.

The BoE has hiked interest rates 11 times since December 2021 and is expected to deliver a further 25 basis-point increase taking Bank Rate to 4.5 per cent on May 11 in an effort bring down double-digit inflation.

Lloyds said wage growth hit a seven-month high, with nearly a third of businesses expecting pay to increase by at least 3 per cent.

The survey also showed hiring intentions improved for the fifth month in a row, with the net balance ticking up three points to 27 per cent, the highest level since June last year.