By David Milliken
LONDON, Dec 21 (Reuters) - British business confidence began
to feel the impact of the Omicron variant of coronavirus this
month, alongside further upward pressure on prices and staffing
costs, a survey showed on Tuesday.
Lloyds Bank said its monthly business confidence survey,
conducted between Nov. 26 and Dec. 10, held steady at 40% this
month, well above its long-run average of 28%.
However, responses 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 realised," said Hann-Ju Ho, senior
economist at Lloyds Bank Commercial Banking.
The Bank of England raised its main interest rate to 0.25%
from 0.1% last week - despite seeing a short-term hit to growth
from Omicron - and its chief economist said further rate rises
were likely if price pressures did not ease.
Lloyds survey showed 45% of businesses expected to raise
prices in December, up from 44% in November, as wage pressures -
an especial concern for the BoE - increased further.
"Pay expectations continue to show strength, reaching new
highs of 48% and 26% for firms expecting average pay growth of
2% and 3% respectively," Lloyds said. Some 14% of businesses
expected to raise pay by at least 4%, the bank added.
The pay expectations are broadly in line with those of other
surveys.
(Reporting by David Milliken, editing by Andy Bruce)
Lloyds (LLOY)
