Gloom spreading over here as well

Mar 17 2008 by Andrew Mernin, The Journal

CONFIDENCE in the state of the UK economy has fallen for the sixth month in a row and slumped to a six-year low, according to a survey of companies.

The poll of more than 200 firms by Lloyds TSB showed that just over half were more pessimistic than three months ago, with just one in four more hopeful.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “Firms’ concern over the wider economy has not been helped by the spate of weakening economic news coming from the housing market and falling consumer confidence. There’s likely to be little comfort on interest rates either, as elevated inflation expectations are becoming a noose around the Bank of England’s neck, preventing the monetary policy committee from making large cuts in official interest rates at a time when there is no fiscal slack to significantly boost the economy.

“Although this year is likely to be a challenging one for many businesses, we expect confidence to improve in the second half and economic growth to accelerate in 2009.”