UK Business Confidence Rebounds Sharply in February – Lloyds

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Business confidence in the UK surged in February to its highest level since August, reversing five months of decline, as economic optimism improved, according to the latest Lloyds Bank economic optimism.

The headline confidence index rose 12 percentage points to 49%, significantly above the long-term average of 29%.

An 18-point increase in economic optimism largely drove the sharp rebound, the biggest monthly rise since late 2020, amid growing expectations of an economic recovery.

Confidence improved across all major sectors, with manufacturing, construction, retail, and services hitting multi-month highs.

Regionally, the North East emerged as the most confident area, followed by the North West and East of England. Only the East Midlands saw a slight decline.

Hiring intentions also rebounded after three consecutive months of decline, with a net balance of 41% of firms planning to increase their workforce.

This rise in hiring expectations fueled stronger wage growth projections, with more firms anticipating pay raises of over 4%, a nine-month high.

Despite the positive sentiment, businesses continued to cite rising costs and economic uncertainty as key challenges. Price expectations increased, with 66% of firms planning to raise prices in the coming year, marking a five-month high.

The survey, conducted from February 3 to 17, coincided with the Bank of England’s decision to lower interest rates to 4.5%, a move that likely bolstered confidence.

Lloyds Bank Senior Economist Hann-Ju Ho said the findings highlight UK businesses’ resilience and their ability to navigate economic challenges, adding that firms are positioning themselves for growth in response to increased demand.