As per the results of a survey released on Tuesday, business confidence in Britain has begun to feel the impact of the Omicron variant this month. The development comes at a time of the country is experiencing an increase in prices and staffing costs.
In a statement Lloyds Bank said, its monthly business confidence survey, conducted between November 26 and December 10, held steady at 40% this month, above its long-run average of 28%. Monthly business confidence weakened in the second week of the survey when the impact of the Omicron variant began to become clearer, with sentiment falling back to 32%, similar to during the spring and summer.
Last week IHS Markit purchasing managers’ data showed activity growth fell to a 10-month low this month.
“Businesses face into a number of headwinds and challenging trading conditions, including higher interest rates, as we move into 2022, but many remain resilient and hopeful that acute downside risks are not realized,” said Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking.
Britain’s central bank has raised its main interest rate to 0.25% from 0.1% last week, despite seeing a short-term hit to growth from Omicron, with its chief economist saying, interest rates could rise if price pressures did not ease.
“Pay expectations continue to show strength, reaching new highs of 48% and 26% for firms expecting average pay growth of 2% and 3% respectively,” said Lloyds.
The pay expectations are broadly in line with those of other surveys.