UK business confidence withers away, surveys show – Reuters UK

LONDON, Oct 19 (Reuters) – Confidence among British businesses has dropped precipitously, damaged by a toxic combination of rising costs and economic turmoil, surveys showed on Wednesday.

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 COVID-19 lockdowns.

The survey ran from Sept. 20 to Oct. 4, covering much of the period since Prime Minister Liz Truss’s economic plans published on Sept. 23 triggered a historic sell-off in British assets.

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A separate report from the Recruitment and Employment Confederation, covering July through to late September, also showed businesses’ sentiment towards the economy and hiring and investment fell sharply.

The surveys underline the threat of recession and scale of the task facing new finance minister Jeremy Hunt in turning Britain’s economy around.

“Recent political and economic turmoil hasn’t helped, which is why it is vital the government focuses on stability,” said FSB national chair Martin McTague.

The FSB said 68% of small businesses had raised pay over the last year, with wage increases averaging 4.5%.

A different survey from human resources data company XpertHR showed the median company pay deal in the three months ending September was 4%, unchanged for the sixth month running.

However, companies said they expected to raise pay by more in the coming year, by a median 5% in August 2023.

“Organisations are under a great deal of pressure to increase pay in line with rising cost-of-living,” said Sheila Attwood, pay and benefits editor at XpertHR.

“But while inflation is clearly the most prominent factor likely to push up the value of pay awards, it is affordability that employers will ultimately have to consider when making the final decision.”

Official consumer prices figures for September are due at 0600 GMT. A Reuters poll of economists suggested the headline rate of annual inflation will inch up to 10% from 9.9% in August.

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Reporting by Andy Bruce
Editing by Mark Potter

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