Business confidence slipped back last month, with fewer companies expressing optimism about the economy, according to a new report.
A survey of more than 200 firms by Lloyds Bank found almost a third were less optimistic than three months ago, implying that the UK economy will remain “weak” going into the second half of the year.
Retail and distribution was the weakest sector, although manufacturing confidence also fell back, the study found.
Trevor Williams, chief economist at Lloyds Bank Corporate Markets, said: “The business barometer suggests that, as long as medium term inflation expectations remain anchored to the 2% target, the economic environment remains one in which the majority on the monetary policy committee would not want to raise interest rates.
“The fall in business confidence in May is a partial correction from the strong rise in April which had reflected relief among businesses that interest rates would not be raised in the near term.
“The underlying trend is one of modest improvement in recent months, but the strength of the economic recovery is still perceived as uncertain, especially for businesses dependent on consumer spending prospects.”