Business confidence has fallen to its lowest level in more than a year, according to the latest research from Lloyds Bank.
The Lloyds Bank business barometer fell two points to 37% this month - the fifth monthly drop in a row.
But while confidence is dropping, its still above the long-term average of 29%.
Lloyds, The Times reports, said the fall has been driven principally by post-autumn budget pessimism in the retail and hospitality sectors.
Rachel Reeves' changes to National Insurance Contributions struck a damaging blow to firms employing low-income staff.
A number of surveys since the budget announcement in October indicated firms were less likely to hire new staff.
Supermarket giants Tesco, Morrisons and Sainsbury's all announced job cuts this month.
However, Lloyds also revealed confidence in future trading prospects grew in January, with 60% of firms surveyed more optimistic about their output for the year ahead.
Nearly half of businesses also indicated their intention to grow their workforce in the next 12 months.
Hann-Ju Ho, a senior economist at Lloyds Bank Commercial Banking, said: “Changes in confidence can sometimes be sudden and sharp, but what we have seen recently has been a more gradual and measured decrease over time.
“The figures for trading prospects show promise with businesses signalling more resilience and assurance in their ability to weather perceived economic headwinds.”