UK business confidence has reached its highest level in a decade, according to the latest Lloyds Bank Business Barometer, as optimism continues to recover across the country’s services sector despite ongoing economic headwinds.
The July 2025 edition of the closely watched survey, which canvasses around 1,200 UK companies with annual turnover above £250,000, recorded a headline confidence index of 52%. This marks the highest reading since November 2015 and is up one point from June. The data reflects a third consecutive monthly increase and the first time the index has moved above the 50% mark in nearly ten years.
Economic optimism, a key component of the survey, rose to 47% — an eleven-month high — while firms’ trading prospects climbed to 58%. These gains were driven largely by a sharp rebound in the services sector, where confidence surged by 11 points to reach 61%. In contrast, manufacturing, retail, and construction all saw confidence slip during the period, highlighting continued challenges in those industries.
The report also shows that hiring intentions are at their strongest in a decade, with 60% of businesses expecting to increase their headcount over the next year. Just 14% anticipate staff reductions, resulting in a net positive balance of around 46%. This resilience in hiring comes despite rising employment costs and an ongoing £20–25 billion payroll tax headwind.
Pricing pressures remain a key concern for businesses. Approximately 61% of firms expect to raise prices in the coming twelve months — well above the long-term survey average of 45%. While wage growth expectations have eased slightly, with 34% forecasting pay increases of 3% or more (down from 36% in June), the data suggests that cost pressures will persist across much of the UK economy.
Regional variations remain significant. Wales retained its position as the most optimistic region, while business confidence rose in six out of twelve UK regions overall. London and the West Midlands were notable exceptions, with confidence declining by two points and approximately twenty points, respectively, though London remains the third most optimistic region in the country.
The positive figures from Lloyds stand in contrast to other leading business sentiment surveys. While the S & P Global PMI and CBI barometers have recorded flat or negative readings in recent months, Lloyds’ data suggests a more robust underlying recovery. Analysts attribute much of this divergence to the outsized impact of the services sector, which continues to lead growth as trade tensions and global tariff fears recede.
Commenting on the results, a Lloyds spokesperson said: “The sustained rise in business confidence — especially in services and hiring intentions — reflects cautious but genuine optimism as UK firms respond to an improved trading environment. While cost pressures remain, many businesses are positioning themselves for renewed growth in the second half of the year.”
The results also arrive against a backdrop of significant policy and infrastructure initiatives, with the UK government pursuing long-term plans aimed at strengthening industrial and financial sectors. Lloyds’ leadership points to a £725 billion infrastructure pipeline and targeted support for high-growth industries such as technology and clean energy as key pillars of the UK’s ongoing economic strategy.
As confidence recovers from an April low — triggered by global tariff threats — the latest figures signal a degree of resilience among UK firms, particularly those in service-led industries. However, the persistence of elevated input costs and regional disparities remains a reminder that the recovery is not yet uniform.
