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Business confidence has risen to its highest level in ten months as companies become increasingly optimistic about filling staff shortages, according to the latest Lloyds Bank business barometer.
An easing of wage demands from last year’s highs boosted optimism among business leaders that they will be able to recruit staff, according to the survey of 1,200 companies with an annual turnover of more than £250,000.
Optimism about the economy rose by 11 points to 23 per cent in the latest poll, while trading prospects recorded a four-point increase to 52 per cent. The net balance for the latter rose by its biggest margin in two years.
Wage expectations rose in March, with 26 per cent of businesses expecting to increase pay by 3 per cent or more, up from 23 per cent the previous month. The share of businesses that expect pay growth of 2 per cent or more rose for the second month in a row to 45 per cent.
However, there are signs that the rate of wage growth is slowing down. Anticipated staffing levels rose for a fourth consecutive month, while the share of businesses planning to increase their prices further fell to a six-month low.
Britain is now expected to avoid a recession this year, according to the Office for Budget Responsibility, but inflation surprised forecasters with a rise from 10.1 per cent to 10.4 per cent last month.
The survey, conducted between March 1 and 15, did not capture the full impact on business confidence of the latest interest rate rise, the surprise jump in inflation or Jeremy Hunt’s budget, announced on March 15.
Hann-Ju Ho, senior economist in commercial banking for Lloyds Bank, one of the leading high street lenders, said: “Business confidence has seen a surge this month with economic optimism and trading prospects bolstering firms.
“With hiring intentions improving, we may see employment growth picking up in the coming months. Tentative signs of easing wage pressures suggest that businesses’ difficulties in finding staff may have started to ease.”