Gloom deepens among UK businesses, Lloyds survey shows

LONDON (Reuters) - British businesses turned more pessimistic in January, extending a run of falling corporate confidence to five months, but there were some more hopeful views about trading prospects for the coming year, according to a survey published on Friday.

In the latest sign of gloom among businesses who were hit by the announcement of a 25 billion-pound ($31 billion) tax increase in October, the Lloyds Bank Business Barometer fell by two points to 37%, its lowest in a year.

Finance minister Rachel Reeves sought this week to lift business morale by confirming her support for an expansion of London's Heathrow Airport and other development projects.

The Lloyds survey - which has been running since 2002 - remains above its long-run average of 29%, but has been dragged down for four of the last five months by businesses' ebbing optimism about the economy.

"Changes in confidence can sometimes be sudden and sharp, but what we have seen recently has been a more gradual and measured decrease," Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said.

However, an improvement in the survey's measure of trading prospects suggested companies were becoming more confident about their ability to cope with the economic slowdown, he added.

The survey included details likely to be noted by the Bank of England which is expected to cut interest rates next week on signs of loss of momentum in the economy.

A gauge of hiring plans weakened slightly to its lowest since June last year and the share of firms planning to increase their prices was its lowest in five months.

The survey was based on responses from 1,200 companies between Jan. 3 and Jan. 17.

($1 = 0.8024 pounds)

(Writing by William Schomberg; editing by David Milliken)