UK businesses became more downbeat about the economic outlook in December, with the biggest monthly decline in confidence in more than a year, reports Reuters, citing Lloyds Bank Business Barometer, which surveyed 1,200 firms across the economy. The Barometer fell by seven points to 35% from November's 21-month high of 42%, and the largest monthly fall since August 2022.

Today’s reading was still above the survey's long-run average of 28% but heading in a downward direction. This contrasts with the similar composite S&P Purchasing Managers' Index for services and manufacturing, which beat expectations last week but remains weak by historic standards.

Lloyds' survey showed hiring intentions cooled but the proportion of companies planning to raise salaries rose. Pricing expectations fell for the first time since July.

Paul Gordon, a managing director at Lloyds Bank, said the economic outlook "remains tough", and that businesses should prioritise a strong cashflow and look carefully at staffing. Hann-Ju Ho, senior economist at Lloyds, added, “Businesses are also balancing cost pressures with a challenging labour market that will see increases to minimum wage in April 2024, at a time when they are managing staff retention and recruitment decisions.”