Business confidence across the UK is at a 15-month low according to the latest research from Lloyds Bank.
Its latest monthly barometer — which looks at businesses across different sectors — found confidence fell by 10 points to 28% — the lowest level since March 2021, when the economy emerged from the second Covid wave.
This fall in confidence comes as inflation reaches its highest level for 40 years as the cost of living pressures on households continue to grow.
However, Lloyds points out that the level of confidence for June is equivalent to the barometer’s long-term average of 28%, and consistent with the continued relative stability of business confidence around the long-term average.
This general business outlook however is not necessarily reflected within the mortgage advice sector.
Research published today by Paragon Bank showed that brokers remain optimistic that remortgage activity will drive business growth into 2023, across both residential and buy-to-let sectors.
Meanwhile recent figures from RICS show that while the housing market appears to be cooling, with a slight drop in buyer demand, surveyors expect prices to continue rising, albeit it at a slower rate, in the medium term.
RICS also found that demand in the lettings market demand has continued to rise.
L&C director David Hollingworth says: “The uncertainties posed by the cost of living rises and interest rate increases are bound to be on many brokers’ minds but may not be weighing so heavily on confidence, given the continued high level of market demand.”
Broker Conveyancing chief executive Mark Snape has said he remains confident, despite an expected slowdown in the housing market.
“For advisers, there is continued strength and resilience within the remortgage and product transfer market, which will deliver business levels.
“But a greater amount of purchase activity could make all the difference in terms of income and profitability; especially after a year — 2021 — when the purchase market was so phenomenally strong.”
He pointed out that no-one within the mortgage market is expecting it to follow the same trajectory in 2022 and 2023 than has been seen over the last two years.
The Lloyds monitor found that over half of businesses plan to increase their prices, as they anticipate higher prices for products or services in the year to come.
Firms also adjusted their their optimism with increased caution on trading prospects as 49% of businesses (down from 56% in April) were more optimistic about the economy, while 27% (up from 23%) were less optimistic about the economy.
Lloyds Bank senior economist commercial banking Hann-Ju Ho, says: “Business confidence declined this month, suggesting that the momentum for growth is moderating.
“Firms remain broadly positive but face several challenges ahead, including concerns around higher costs and slowing demand. If these trends continue, businesses may have less scope to pass on higher costs to support their margins.”
Your Mortgage Decisions director Dominik Lipnicki comments: “Without a doubt many businesses will be worried for the year ahead. Spiralling inflation, record high taxation together with the current economic uncertainty makes for testing times ahead.
“That said, for us in the world of mortgages, rising mortgage rates mean that there is a real urgency for clients to remortgage and the pandemic has shown just how important it is to review protection.
“The real danger is if we see long-term stagflation or worst still a recession and some believe that this is where we may well be heading.”