Concerns regarding the state of the UK economy led to a decline in business confidence during November, despite a generally positive outlook for the future, as indicated by a prominent survey.

The recent Lloyds Bank Business Barometer, which measures business sentiment monthly, reported a three-point drop in confidence to 41% last month.

This latest decrease moves business optimism further from the nine-year peak reached in July and August. The decline appears to be influenced by the government’s October budget decisions, which included increases in employers’ national insurance contributions, a hike in the minimum wage, and cuts to business rates relief.

While 52% of the surveyed businesses indicated greater optimism about the economy compared to three months prior, slightly over a quarter expressed a more negative sentiment, rising from 20% in October.

Conversely, the findings revealed that businesses are optimistic regarding their own trading conditions, with 63% anticipating increased activity in the next year, whereas only 8% expected a decline.

Despite the hikes in minimum wage and national insurance contributions, Lloyds reported that 52% of businesses plan to expand their workforce, significantly outpacing the number of those preparing to downsize.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, commented, “These results indicate that while businesses have mixed feelings about the economy, they perceive their own operations as well-positioned to handle upcoming challenges.”

Other surveys, however, present a more pessimistic scenario regarding the UK’s economic and business climate. The CBI’s latest assessment of the private sector forecasts a decline in overall activity for the three months leading to February, following a decrease observed in the previous three months.

The CBI’s monthly growth indicator suggests that companies in the dominant services sector, which constitutes three-quarters of the economy, expect to report a negative growth forecast of 13%.

Alpesh Paleja, deputy chief economist at CBI, noted that growth expectations as the new year approaches have “taken a significant downturn.”

“Our surveys indicate that anticipated activity was already declining prior to the October budget, and the Chancellor’s announcements have left businesses with even tougher decisions to confront,” he remarked.

A survey conducted by Iwoca, one of Europe’s largest lenders to small and medium-sized enterprises (SMEs), shows that 34% of these businesses are now feeling more pessimistic about their future following the budget, up from 15% in the previous quarter. Colin Goldstein, chief commercial officer at Iwoca, stated that “growing pessimism and increased recession fears are shifting SME mindsets, leading to a stronger focus on survival rather than growth.”