Business confidence in the UK has plunged on fears over the eurozone crisis and the prospect of a Greek exit, according to a survey from Lloyds Banking Group.
Corporate sentiment about the UK's economic prospects collapsed in May, the Lloyds Bank Wholesale Banking and Markets Business Barometer showed, tumbling 47 points from a positive reading of 26pc to -21pc – meaning most respondents were pessimistic about the outlook.
The reading will worry the Treasury, which is counting on companies to release for investment some of the £750bn they are hoarding.
The drop in confidence, though, will only encourage them to wait. Although sentiment about the UK in general turned negative, companies were still fairly upbeat about their own trading prospects, with the reading in May falling just eight points to 35pc.
Profit margins also improved marginally, with the balance rising two points to -15pc. Overall, however, the May survey pointed to weak growth of 0.2pc in the second quarter of the year – excluding the effect of the extra day's bank holiday for the Diamond Jubilee, which may have knocked as much as 0.5 percentage points off growth.
Sentiment also remained above the levels seen at the end of 2011 and during the height of 2008 financial crisis.
Trevor Williams, chief economist at Lloyds Bank Wholesale Banking and Markets, said: "The renewed concern around the eurozone is clearly having an impact on businesses' sentiment towards prospects for the UK economy and, to a lesser extent, to their own prospects."
The most notable declines in confidence in May came in the North and Midlands and in the retail and distribution sector. A separate survey from Visa on household spending also offered the Coalition little reason for cheer.
Consumer expenditure in May was flat compared with the previous month, an improvement on the 2.1pc decline in April but weaker than the 0.3pc rise in March. On an annual measure, household spending fell by 1.6pc, although the decline was the lowest in five months.
The underlying trend was more concerning, however. Comparing spending over the past three months with the previous three months, the decline is accelerating – at 1.1pc against 0.7pc in April and 0.4pc in March.
Steve Perry, commercial director at Visa Europe, said: "Despite hopes that consumer spending would rebound after a dismal April, the UK expenditure index has revealed that consumer spending in May remained flat.
Indeed, the underlying trend is still weak signifying the struggle that consumers face." Visa's survey, compiled from the 1.9bn transactions every quarter over visa debt and credit cards, showed that spending on both the high street and online fell in May.
telegraph.co.uk
Corporate sentiment about the UK's economic prospects collapsed in May, the Lloyds Bank Wholesale Banking and Markets Business Barometer showed, tumbling 47 points from a positive reading of 26pc to -21pc – meaning most respondents were pessimistic about the outlook.
The reading will worry the Treasury, which is counting on companies to release for investment some of the £750bn they are hoarding.
The drop in confidence, though, will only encourage them to wait. Although sentiment about the UK in general turned negative, companies were still fairly upbeat about their own trading prospects, with the reading in May falling just eight points to 35pc.
Profit margins also improved marginally, with the balance rising two points to -15pc. Overall, however, the May survey pointed to weak growth of 0.2pc in the second quarter of the year – excluding the effect of the extra day's bank holiday for the Diamond Jubilee, which may have knocked as much as 0.5 percentage points off growth.
Sentiment also remained above the levels seen at the end of 2011 and during the height of 2008 financial crisis.
Trevor Williams, chief economist at Lloyds Bank Wholesale Banking and Markets, said: "The renewed concern around the eurozone is clearly having an impact on businesses' sentiment towards prospects for the UK economy and, to a lesser extent, to their own prospects."
The most notable declines in confidence in May came in the North and Midlands and in the retail and distribution sector. A separate survey from Visa on household spending also offered the Coalition little reason for cheer.
Consumer expenditure in May was flat compared with the previous month, an improvement on the 2.1pc decline in April but weaker than the 0.3pc rise in March. On an annual measure, household spending fell by 1.6pc, although the decline was the lowest in five months.
The underlying trend was more concerning, however. Comparing spending over the past three months with the previous three months, the decline is accelerating – at 1.1pc against 0.7pc in April and 0.4pc in March.
Steve Perry, commercial director at Visa Europe, said: "Despite hopes that consumer spending would rebound after a dismal April, the UK expenditure index has revealed that consumer spending in May remained flat.
Indeed, the underlying trend is still weak signifying the struggle that consumers face." Visa's survey, compiled from the 1.9bn transactions every quarter over visa debt and credit cards, showed that spending on both the high street and online fell in May.
telegraph.co.uk
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