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Business confidence falls

Business confidence fell for the sixth consecutive month in February, according to Lloyds TSB.

The bank's business barometer revealed increasing pessimism in the business community, with 51 per cent of respondents feeling less confident about the economy than three months ago.

The balance between those expecting their own activity to increase and those expecting a decline, also fell.

"Firms' concern over the wider economy has not been helped by the spate of weakening economic news coming from the housing market and falling consumer confidence," said Trevor Williams, chief economist at Lloyds TSB Corporate Markets.

"There's likely to be little comfort on interest rates either, as elevated inflation expectations are becoming a noose around the Bank of England's neck, preventing the MPC from making large cuts in official interest rates at a time when there is no fiscal slack to significantly boost the economy."

The Bank of England cut interest rates in December and February in an effort to revive the flagging economy.

Despite concerns about inflation, fuelled by rising household bills, further cuts in the cost of borrowing are expected in the coming months.

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