UK firms most confident in four years, planning pay growth-Lloyds

LONDON (Reuters) - British business confidence jumped to its highest level in more than four years in August and a measure of pay growth was the strongest since 2018, a survey published by Lloyds Bank showed on Tuesday.

Adding to signs of a recovery in Britain's economy from its coronavirus crash last year, Lloyds said its monthly business barometer rose by 6 percentage points to +36%, the highest since April 2017.

Optimism in the economy also rose by six percentage points after a dip in July, when many firms were facing staff shortages caused by the spread of the Delta variant of coronavirus and strict self-isolation rules which have since been relaxed.

"Staff shortages remain a challenge but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead," Lloyds economist Hann-Ju Ho said.

More than a third of companies predicted they would offer staff pay rises of at least 2% over the next 12 months and 17% anticipated 3%-plus wage growth, the highest since Lloyds began asking about salary increases in 2018.

The Bank of England is watching pay growth closely as it tries to work out how persistent a recent rise in inflation is likely to prove.

Lloyds said 44% of companies it surveyed expected to increase the prices they charge, the highest level since December 2017.

The survey was based on a poll of 1,200 firms conducted between Aug. 2 and Aug. 16.

(Reporting by William Schomberg, editing by David Milliken)