(Bloomberg) -- British business confidence fell and consumers were hesitant about their financial situation as Prime Minister Theresa May triggered formal Brexit talks this month.
The net balance of companies with a positive outlook dropped 5 percentage points to 35 percent as their expectations for the economy weakened, according to Lloyds Bank Commercial Banking's Business Barometer for March. A separate measure from GfK U.K. Ltd. on household sentiment was unchanged at minus 6, remaining below zero for an 11th month.
Business confidence fell in the immediate aftermath of June's vote to leave the European Union, before rebounding as retail spending defied predictions of a slowdown. The U.K. gave official notice of its intention to withdraw from the EU when May sent a letter to Brussels on Wednesday.
Despite the drop in company sentiment, “results are consistent with a continued robust pace of economic growth,” Hann-Ju Ho, senior economist for Lloyds, said in an emailed statement. “Attention is now likely to turn to the start of negotiations of the exit terms and any prospective transitional arrangements.”
The net balance of firms indicating greater optimism about the economy fell by 14 percentage points to 20 percent this month, Lloyds said. Despite this, businesses' hiring intentions climbed to the highest level in two years.
In GfK's report, a measure of Britons' sentiment about their financial situation over the next 12 months stayed at 3 in March, 6 points lower than a year earlier. Money worries among households may increase as incomes are expected to grow more slowly than inflation this year.
“Consumers remain cagey about the state of their personal finances,” Joe Staton, head of market dynamics at GfK, said in an emailed report. “Since the Brexit referendum, household spending has been a big driver of growth, so any slump will dent future economic prospects.”
Lloyds questioned about 300 companies with sales of more than 1 million pounds ($1.24 million) between March 6 and March 15 for its survey, while 2,001 people responded to GfK's study between March 1 and March 15.
To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Lucy Meakin
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
