UK businesses scale back pay plans despite higher inflation – Lloyds
British businesses are scaling back plans for pay rises and hiring, but almost half intend to increase the prices they charge customers as they seek to manage rapidly rising costs, a survey showed on Monday.
The figures from a monthly Lloyds Bank survey will give mixed signals to the Bank of England on the persistence of inflation pressures – and the extent to which they will hamper growth – as it considers a widely expected rate rise this week.
A record 49% of the 1,200 businesses surveyed between Jan. 4 and Jan. 18 said they expected to raise prices, up from 45% in December.
But the proportion expecting to raise pay by 2% – well below the current 5.4% rate of inflation – fell to a five-month low of 41% from 48% in December.
The number planning pay rises of 3% fell to 21% from 26% and those share of those planning 4% pay rises dropped to 12% from 14%.
“Businesses remain cautious about the pandemic and are facing into challenges from rising cost pressures although many are raising their prices in response,” Lloyds Bank economist Hann-Ju Ho said.
Overall confidence slipped from December and hiring intentions were the lowest since August – although 46% of firms still plan to increase their headcount over the next 12 months.
A monthly survey from the Confederation of British Industry on Sunday showed that private-sector growth in the three months to January was the weakest since April, reflecting a big hit to many firms from a wave of Omicron cases in December and January. read more Reporting by David Milliken, Editing by Alistair Smout
This article was originally published by Reuters.