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UK business confidence rises from lows, job cuts on the way - Lloyds

FILE PHOTO: A social distancing sign is pictured during morning rush hour in Canary Wharf, following the outbreak of the coronavirus disease (COVID-19), London, Britain, June 1, 2020. REUTERS/Toby Melville

LONDON (Reuters) - British business confidence has ticked up but remains far below usual levels as the economy struggles to cope with social distancing and employers are preparing to cut jobs, a survey showed on Friday.

Lloyds Bank’s business barometer rose eight points to -14, the biggest monthly increase in three years and optimism about the economy and trading prospects showed similar increases.

Hann-Ju Ho, a Lloyds Bank economist, said the low levels of confidence, combined with the biggest contraction of the economy on record between April and June when it shrank by 20%, meant the shape of any recovered remains highly uncertain.

“Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base,” he said.

Surveys of purchasing managers published last week showed the recovery was gathering pace.

But economists say the bounce-back could prove short-lived with unemployment expected to rise as Britain’s state-funded job subsidy scheme is wound down before its expiry on Oct. 31.

Lloyds said only 18% of businesses with staff still on furlough expected to be able to retain all of them.

Finance minister Rishi Sunak has ruled out extending the Coronavirus Job Retention Scheme.

Writing by William Schomberg, editing by Andy Bruce

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