UK business confidence hits nine-year high amid easing trade tensions
&imwidth=600&imheight=450&format=webp&quality=medium "UK business confidence hits nine-year high amid easing trade tensions")
People shop on Oxford Street in London, Britain April 10, 2023. Photograph: (Reuters)
The Lloyds Bank Business Barometer rose by one point to 51 per cent this month, marking the highest level of employer confidence since November 2015. Hiring, wage growth outlook improves as employers regain optimism.
Business confidence among UK firms surged to its highest level since 2015 in June, according to new data from Lloyds Bank, signalling renewed optimism about the economic outlook after months of turbulence caused by global trade tensions and domestic tax increases. The Lloyds Bank Business Barometer rose by one point to 51 per cent this month, marking the highest level of employer confidence since November 2015. The increase builds on a sharp 11-point jump in May that followed a notable decline in April, when concerns over US President Donald Trump’s tariff hikes and the UK government’s new employer tax measures dampened sentiment.
The June high comes after what many business leaders described as a “harrowing” first quarter. In April, the Institute of Chartered Accountants in England and Wales (ICAEW) reported that its business confidence index had plunged to -3, the lowest level in over two years. The drop was attributed to April’s rise in employer national insurance contributions and the economic uncertainty sparked by Trump’s global tariff escalation.
Lloyds’ May report, however, marked a clear turning point. The easing of some US tariffs, combined with a draft UK-US agreement to cut levies on British autos, aluminium, and steel, contributed to a sharp rebound in confidence. Now, with financial markets stabilising and retail sales rebounding, employers appear more willing to invest and hire.
Hiring and pay expectations rise
Lloyds’ latest survey also suggests that firms are positioning themselves for future growth. Hiring intentions strengthened, with 60 per cent of companies now expecting to increase staffing levels over the next 12 months. Wage expectations also rose for the second consecutive month; 36 per cent of firms now forecast average pay increases of at least 3 per cent.
“The rebound in business confidence suggests that firms might be in a stronger position for the next quarter,” said Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking. “The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid the easing of global trade tensions.”
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Regionally, sentiment improved across most parts of the UK, with the East Midlands, Northern Ireland, and the South West recording the biggest gains. Construction firms were among the most upbeat, reaching their highest confidence levels in nine months, while services led the broader recovery in sentiment, even as manufacturing continued to face export challenges.
Outlook still cautious despite gains
Despite the positive data, economists warn that underlying risks remain. The Confederation of British Industry (CBI) noted that expectations for the broader economy remain subdued due to high employment costs, cautious consumer spending, and geopolitical uncertainty. Still, the overall upward momentum in business sentiment offers a promising signal for the second half of 2025, especially if trade tensions continue to ease and domestic demand remains resilient.