BUSINESS confidence in the economy has "plunged" following recent warnings of a housing market crash.

A survey of 200 firms by Lloyds TSB showed that one in three was now more pessimistic than three months ago. Despite the gloomy assessment most companies said they expected to increase business activity over the next year. Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: "UK firms shrugged off the latest interest rate rise but it appears they were unable to ignore recent predictions of a housing market crash." Lloyds TSB said it expected optimism about the economy to improve as fears of a housing market crash ease.