UK business confidence holds strong as retail sector surges

Business confidence in the UK remained robust in March, sustaining the high levels reported in February, according to the latest Lloyds Business Barometer. Overall confidence held steady at 49%, the highest figure since August 2024 and well above the long-term average of 29%.

The headline figure was underpinned by a surge in confidence among retail firms, which rose seven points to 58%, marking the sector’s strongest sentiment in nearly a decade, last seen in August 2015. In contrast, manufacturing firms saw confidence dip by 12 points to 39%, reflecting concerns about ongoing supply chain disruptions.

Trading prospects and economic optimism

Businesses’ own trading prospects remained unchanged at 57%, marking the highest level since 2017 and slightly above last year’s high. Nearly two-thirds (64%) of firms anticipate stronger activity in the coming year.

However, economic optimism edged down slightly, with 60% of firms feeling more optimistic about the economy, compared to 63% in February. Nineteen per cent were less optimistic, resulting in a one-point dip in the net economic optimism balance to 40%—still among the highest readings since August 2024.

Employment and pay expectations

Hiring intentions saw a modest decline, down one point to 40%, led primarily by dips in the manufacturing and construction sectors. Nonetheless, the figure represents the second strongest employment sentiment since the pandemic. Pay expectations also eased slightly this month but remain above levels seen in late 2024.

“Business confidence remained steady this month, suggesting that UK companies may have been waiting to see the impact of government decisions at home and globally,” said Hann-Ju Ho, Senior Economist at Lloyds Commercial Banking.

“Despite this, today’s data continues to reflect a positive growth trend in the UK economy.”

Sector and regional highlights

In addition to the retail sector’s standout performance, the service sector confidence fell slightly to 47%, the construction sector dropped to 48%, and the manufacturing sector marked the sharpest fall to 39%

Regionally, seven out of 12 UK regions and nations reported increased confidence. The West Midlands and London led the way, followed by the North West and Scotland. Notable improvements were also seen in Wales, the South East, and Yorkshire and the Humber. However, confidence in the North East and East of England declined significantly, falling from recent highs to 43% and 29%, respectively.

“The findings of the latest Business Barometer are encouraging, maintaining the previous month’s uplifted business confidence and economic optimism across the UK,” said Paul Kempster, Managing Director for Commercial Banking Coverage at Lloyds.

“At Lloyds, we are committed to supporting businesses and our range of financial services and expertise are designed to help firms navigate the evolving economic landscape, seize new opportunities, and achieve their growth ambitions.”

Pricing outlook

Price expectations eased slightly from February’s five-month high but remained firm. 63% of firms expect to raise prices over the next 12 months, while only 2% anticipate price reductions.

The Lloyds Business Barometer, which surveys 1,200 UK companies monthly, offers early insights into business sentiment and economic trends across sectors and regions. March’s data was collected between 3–17 March 2025.