Business confidence ended 2024 at low point on jobs and prices fears

Business confidence fell to its lowest level in 2024 during December, as fears around layoffs and price increases hurt opportunity for business growth.

Business confidence ticked down by two points to 39 per cent this month, though remained above the long-term average of 29 per cent, according to the latest Lloyds Business Barometer.

“While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs,” said Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking.

However, businesses did express more positivity about the broader economy, with 55 per cent of respondents feeling more confident in the economy.

Almost two-third of respondents anticipated stronger output, though 11 per cent expected less business activity in the new years, causing trading prospects to fall to their lowest result since June.

Business expressed mixed sentiment around employment, with a slight drop in companies planning to raise their number of employees next year.

While 52 per cent of respondents expected to boost their headcount, 19 per cent planned to reduce their workforce next year, which is the highest number of nine months.

“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be a significant for this time of year,” said Ho.

More companies are also planning to increase their prices next year, in a blow to efforts to cut inflation.

A total of 64 per cent (up from 63 per cent last month) said they expect to up prices for goods and services, with only two per cent intending to lower prices.

“The mixed results in trading prospects and economic optimism suggest that while businesses feel they are facing some challenges, there is still some opportunity in regard to the wider economy,” added Paul Kempster, managing director for relationship management at Lloyds.

“Although overall confidence dipped this month, we’re still optimistic that firms’ trading prospects will return to the levels seen earlier this year.”