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A survey of UK businesses shows that confidence has reached its highest since the start of 2019, thanks to an improved assessment of the impact of Brexit on business prospects.
The Lloyds Business Barometer is a monthly test of business confidence across the regions and sectors of the UK economy, and the survey has reported a sharp fall in confidence amongst businesses in 2019.
However, it appears growing hope for an orderly Brexit in early 2020 is providing a boost to confidence heading into year-end 2019.
Lloyds report that overall business confidence in November rose for the third straight month, as optimism regarding the economy increased to its highest level since January.
The net balance for economic optimism was up 9 points to 7%, following the rise of 8 points in October. Overall business confidence increased by 3 points to 9%.
Concerning their prospects for the coming year, business sentiment remains steady with November’s net balance slightly lower by 2 points to 12%.
"The improvement in overall confidence coincided with a less negative assessment of the impact of Brexit on business prospects," report Lloyds.
On Brexit specifically, 22% of firms, the highest since April, said that Brexit has a positive impact, while 38% reported a negative impact. The resulting net balance of -16% was the least negative since January, compared with -18% in October and -25% in September.
The improving levels of confidence appear to have aided a pickup in hiring intentions, which improved slightly this month, with the net balance anticipating a higher headcount in the coming year edging up by 2 points to 5%, although it is significantly lower than 21% a year ago. Overall, 28% of firms (up from 27% last month) signalled an expansion of their workforce, while 23% (down from 24%) forecast fewer employees.
Confidence amongst business in London was seen to have surged by 19 points to 20%, but the West Midlands remains the UK's most confidence region at 24%.
Looking at the various components of the economy, overall confidence improved in manufacturing, retail and services, and was broadly steady in construction.
The retail sector was however the most confident sector, with confidence rising 6 points to 21%, while construction
was in second place despite the slight decline of 2 points to 16%.
Sentiment improved in manufacturing to a four-month high of 10%, which economists at Lloyds Bank say may partly reflect signs of progress in US-China trade negotiations.
Confidence amongst the UK's largest economic sector - services - increased for a second month, by 4 points to 4%, with a notable improvement among firms in the financial and professional services sector.
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