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LONDON: British businesses were their most optimistic in almost two years in November, boosted by growing hopes about the economy, according to a Lloyds Bank survey that reflected expectations among firms that interest rates have peaked.

Lloyds said on Thursday its Business Barometer measure of confidence - which gauges the difference between respondents who feel more confident or less confident about their trading and economic prospects - rose to 42% from 39% in October.

The figure was the highest since February 2022 and well above its long-running average of 28%.

More than half of the companies surveyed by Lloyds were more upbeat about the economy and their trading prospects, and a record share intended to keep on increasing their prices, a potential worry for the Bank of England.

It has kept rates on hold at its last two Monetary Policy Committee meetings after 14 back-to-back increases, but it has stressed that a first rate cut remains a way off.

Confidence across services sector firms reached the highest level since September 2021 at 46% while confidence in the construction sector rose for the first time in three months.

“We’ve also seen a real turnaround in sentiment for manufacturers, with business confidence at a five-month high, reflecting the expectation among many firms that interest rates have now peaked and may begin to fall next year,” Paul Gordon Lloyds’ managing director for relationship management, said. Britain’s economy is suffering from weak growth but also the highest inflation rate among big, rich countries even if the pace of price growth slowed sharply to 4.6% in October.

Lloyds said there were signs that wage expectations could be stabilising despite hiring intentions hitting an 18-month high but companies were still seeking to protect their profits.

“Our data (is) continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter,” Hann-Ju Ho, senior economist at Lloyds Bank, said.

The record share of firms saying they expected to charge more for their goods or services could worry the BoE which is concerned about higher prices becoming entrenched in the economy.

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