The survey showed that economic optimism amongst UK businesses - the factor that weighs most heavily on overall confidence - fell again last month, to the lowest level since the survey began in January 2002.
Just 14 per cent of firms said they were more optimistic about the economy, while 69 per cent were more pessimistic, resulting in a balance of -55 per cent that were more pessimistic overall. This was a fall of 7 per cent from September's previous record low.
In light of these concerns about the economy, the survey revealed that firms continued to rein in their expectations for trading in the year ahead. While 31 per cent of firms expected their business activity to increase over the next twelve months, 26 per cent expected activity to decrease, up 3 per cent from September. As a result, the balance of firms expecting higher rather than lower levels of business activity fell to +5 per cent, from +8 per cent in September.
Business confidence would have been lower still had it not been for the industrial sector, which actually increased expectations of activity. The confidence balance for industrial firms increased by 30 per cent to 29 per cent in October, while it fell 21 per cent to 2 per cent for service firms and fell 9 per cent to -10 per cent for distribution firms.
Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: "In a case of every cloud has a silver lining, the weak pound should, in time, give a welcome boost to the manufacturing sector. UK manufacturing output has declined in recent years but those businesses that are left are highly productive and can take advantage of the accelerated fall in the pound to compete aggressively overseas, even as global growth prospects dim.
"Elsewhere in the UK, the outlook is far from rosy. Rising unemployment and the high cost of borrowing means business confidence continues to break survey records, as firms take an increasingly bleak view of their prospects."
