UK business confidence hits decade high as optimism grows

UK business confidence has reached its highest level since 2015, rising one point to 52% in July, according to the latest Lloyds Bank Business Barometer. This marks the third consecutive monthly increase, fuelled by improving trading prospects and growing economic optimism.

The latest data reveals:

• Business confidence rose to 52%, a 10-year high.
• Economic optimism reached an 11-month high at 47%, up two points.
• Hiring intentions surged, with 60% of firms planning to recruit in the next year.
• Price expectations remained elevated but steady, with a net 61% of businesses expecting to raise prices.
• Services sector confidence soared by 11 points to 61%, leading all sectors.
• Wales remained the most optimistic UK region for the second month running.

Hann-Ju Ho, Senior Economist at Lloyds Commercial Banking, said: “This continued upward trend reflects a growing sense of cautious optimism across the UK economy, underpinned by both improved trading prospects and broader economic sentiment.

“Despite ongoing cost pressures, firms are positioning for growth, particularly in services where hiring and investment plans are accelerating.”

Hiring intentions hit decade high

Despite ongoing cost pressures, firms are ramping up hiring. A net balance of 46% of businesses now plan to expand their workforce in the year ahead, driven largely by strength in the services sector. Retail and manufacturing showed softer hiring trends, while wage growth expectations declined slightly for the first time in three months.

Price pressures remain high

While 65% of businesses still expect to raise prices over the coming year, the figure is stable compared to June. A slight rise in firms expecting to lower prices suggests some easing, but inflationary expectations remain well above the long-term average of 45%.

Sector and regional outlook

The services sector was the standout performer in July, helping offset confidence dips in retail, manufacturing, and construction. Regionally, Wales, the West Midlands, and the North East reported notable gains, while London saw a small two-point decline but still remains among the top three most confident regions.

Paul Kempster, Managing Director for Commercial Banking Coverage at Lloyds, added: “While confidence isn’t rising evenly across all sectors and regions, it’s encouraging to see sentiment holding well above the long-term average.”