British business confidence dipped in September, following a strong performance in July and August when it reached an eight-year high. The decline comes as concerns about the broader

economic outlook reached their highest level in six months, according to a survey by Lloyds Bank published on Monday.

Lloyds' overall business barometer, which measures the difference between companies with positive and negative outlooks, fell by 3 percentage points to +47%, the lowest in three months. While businesses remained optimistic about their own prospects, they were more cautious about the overall economy.

"The more mixed picture of economic optimism suggests that some businesses are exercising caution. While we still expect economic growth, it may progress at a slower pace compared to the first half of 2024," said Hann-Ju Ho, an economist at Lloyds.

Official data on gross domestic product (GDP), expected to be released at 0600 GMT, is likely to confirm that the UK economy grew by 0.6% in the second quarter of 2024. This would mark a stronger-than-anticipated recovery after a shallow recession earlier in the year.

However, earlier in September, the Bank of England revised its growth forecast for the third quarter, projecting a more modest expansion of 0.3%, which aligns with Britain's long-term growth rate.

An S&P Global survey of purchasing managers last week indicated a more pronounced slowdown in growth for September than expected, though the UK remained ahead of the eurozone in terms of economic activity.

S&P noted that some businesses have paused investment and hiring plans, awaiting clarity on tax policy and employment law reforms under the new Labour government. Labour has signaled that tax increases may be higher than initially proposed before July's election and is also expected to introduce legislation aimed at enhancing employment protection for workers with less than two years of service.

In the Lloyds survey, the employment balance—a measure of hiring sentiment—dropped by 1 point to +36% in September.

The survey collected responses from 1,200 British companies with annual sales exceeding £250,000 ($334,325) and was conducted between September 2 and September 16. Photo by Pit-yacker, Wikimedia commons.