UK business confidence weakens, survey shows

LONDON, Oct 19 (Reuters) – A harmful combination of rising costs and economic turmoil has hurt British business confidence, a survey on Wednesday showed.

The Federation of Small Businesses (FSB), a trade body, said its latest small business confidence index fell to -35.9 from -24.7, the worst reading outside of the COVID-19 lockdown.

The survey began in September. 20 to 4 October, covering most of the time since Prime Minister Leeds Truss unveiled his economic plan on 9 September. The 23rd sparked a historic sell-off in British assets.

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A separate report by the Recruitment and Employment Federation, covering July to late September, also showed a sharp decline in business sentiment about the economy, hiring and investment.

The surveys underscore the threat of recession and the scale of the task facing new Treasurer Jeremy Hunt in turning around the UK economy.

“The recent political and economic turmoil has not helped, which is why the government’s focus on stability is crucial,” said FSB national chairman Martin McTugger.

The FSB said 68 per cent of small businesses raised wages last year, with wages rising by an average of 4.5 per cent.

A separate survey by human resources data firm XpertHR showed that the median company compensation transaction was 4% in the three months to September, unchanged for the sixth consecutive month.

However, companies say they expect to increase pay more in the coming year, with a median of 5% through August 2023.

Sheila Attwood, Compensation and Benefits Editor at XpertHR, said: “With the rising cost of living, organisations are under enormous pressure to increase compensation.”

“But while inflation is clearly the most prominent factor likely to drive up the value of pay, what employers ultimately have to consider when making their final decision is affordability.”

Official consumer price data for September will be released at 0600 GMT. A Reuters poll of economists showed headline annual inflation edged up to 10 percent from 9.9 percent in August.

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Edited by Andy Bruce reporting by Mark Porter

Our Standard: The Thomson Reuters Trust Principles.

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