UK business confidence reached its highest level since last August in May, as reported by Lloyds Bank. This surge is attributed to a robust recovery in global financial markets and reduced trade tensions between the US and its partners. The Lloyds Bank business barometer increased by 11 points to 50 per cent, rising from 39 per cent in April, effectively reversing the decline seen in the previous month. This marks its strongest point since summer 2024.
The marked rise in confidence reflects improved sentiment in global markets following US President Donald Trump’s decision to pause his proposed “reciprocal tariffs” until July. A US court ruling declaring these tariffs illegal further bolstered optimism across Asian, European, and American stock exchanges, prompting investors to reassess the global growth outlook.
Hann-Ju Ho, a senior economist at Lloyds Commercial Banking, stated, “The rebound in business confidence suggests that firms might be in a stronger position for the next quarter. The increase in confidence is driven by a significant boost in economic optimism, reflecting the recovery in financial markets amid the easing of global trade tensions.”
The survey, which gathered responses from 1,200 firms, also highlighted improvements in trading prospects and hiring intentions. A third of businesses indicated plans to grant pay rises of 3 per cent or more, and 65 per cent reported intentions to increase prices in the coming year, a decrease of five points from April. Only 2 per cent anticipated reducing prices.
This data emerges amidst mixed news on inflation. UK inflation climbed to 3.5 per cent in April—the highest since January 2024—up from 2.6 per cent the previous month. Nevertheless, stronger-than-expected economic growth supports business sentiment. GDP grew by 0.7 per cent in the first quarter of 2025, and the International Monetary Fund has slightly upgraded its full-year UK growth forecast to 1.2 per cent.
The Lloyds report adds to evidence that the UK economy is demonstrating resilience, even as inflation, wage demands, and global trade policy concerns persist. Despite the uncertainties that lie ahead, the significant rebound in confidence indicates a more positive outlook among British businesses as they enter the latter half of the year.
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[UK business confidence jumps to nine-month high as trade tensions ease](https://bmmagazine.co.uk/news/uk-business-confidence-jumps-to-nine-month-high-as-trade-tensions-ease/)
