British firms 'optimistic'

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British firms 'optimistic'

Tue 19th Jun 2007

British firms remain optimistic about their circumstances despite displaying a marked drop in confidence about the state of the economy in May.

Figures from the latest Lloyds TSB Corporate Markets Business Barometer show that the balance of firms expecting a rise rather than a fall in business only marginally dropped from 65 to 61 per cent in May.

The business barometer also found that the number of firms optimistic about the state of the economy declined from 46 per cent from 55 per cent in April, the lowest figure since December 2006.

Trevor Williams, chief economist at Lloyds TSB Markets, said: "Firms are clearly feeling jittery about the chance of interest rates rising above six per cent and the resulting downward pressure on their profits."

However, he also said that with inflationary pressure weakening, interest rates may not be needed to be raised any further.

"We wait with interest to see what the minutes of June's [Bank of England] meeting indicate for the next base rate decision," he added.