THE confidence of businesses in their prospects rose to an 18-month high in Britain in January according to research for Lloyds Bank.

The bank said 50% of firms were more confident about their prospects in January than in December, while 4% were less positive.

The resulting positive balance of 46% was up six percentage points on the preceding month.

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The bank said the improvement in sentiment reflected the easing of fears about the prospect of the eurozone fragmenting and of US politicians failing to resolve the fiscal cliff dispute in that country. The introduction of the Funding for Lending Scheme by the Bank of England, to encourage lending, was also viewed positively.

Trevor Williams, chief economist at Lloyds Bank Commercial Banking, said the increase in confidence suggests the economy will return to growth in early 2013, at a moderate pace. But Lloyds said business sentiment about the economy fell slightly, the first decline since May 2012.