UK businesses illustrate robust confidence levels with growth driven by optimistic retail firms.
The latest Lloyds Business Barometer study showed that UK business confidence is still on the rebound, floating much higher than the usual 29% average. The optimism level stood at 49% in March, representing its highest level since August 2024.
Notably, retail firms are the ones who fuel the sustainability of trust in British business stability. They expressed a significant seven-point rise in confidence last month, up to 58%, the highest level seen since August 2015.
On the contrary, manufacturing confidence dropped 12 points to 39% due to supply chain worries. Confidence in construction businesses fell to 48%, and services optimism dropped to 47%.
Despite rosy expectations for the national business environment, economic optimism slightly declined among UK entrepreneurs. Although a significant 60% share of local businesses felt more optimistic about the economy, this number is down from 63% registered in February. Moreover, 19% of respondents felt less buoyant regarding the country’s economic prospects, bringing the net balance for economic optimism down one point to 40%. Nevertheless, this still remains the highest level for the last seven months.
Businesses’ trading prospects stood firmly at 57%, slighter up from last year’s high of 56%. Remarkably, positive expectations towards a favourable trading environment remain at the highest levels since 2017, even despite the global trade tariff uncertainty. Nearly two-thirds (64%) of UK entrepreneurs expect even stronger trading activity in the coming year.
British retailers’ current confidence in business stability, even amid global economic uncertainty, comes from a mix of strategic, economic, and operational factors. Firstly, despite global headwinds such as inflation or geopolitical disruptions, British consumers have shown robust spending patterns in key sectors. Additional certainty is driven by a well-regulated domestic market with clear policies, along with supportive government schemes. Finally, local retailers exemplify rapid adaptation to digital and omnichannel formats, leverage diversified business models, and utilise localised supply chain management. These strategies help them ensure that they remain well-positioned to maintain business stability, for better or worse.
As for employment trends, business hiring intentions dropped slightly from 41% to 40%, mainly in manufacturing and construction. However, it’s still the second-highest level since the pandemic. Pay expectations fell a little too, but still stay above late 2024 levels.
To be fair, the sentiment is not homogenous across the country. Seven of the UK’s 12 regions saw higher business confidence. The West Midlands and London led, followed by the North West and Scotland. Wales, the South East, and Yorkshire rose above the national average. At the same time, the North East and East of England saw sharp confidence drops from 69% and 61% to 43% and 29%.
The Lloyds Business Barometer surveys 1,200 UK businesses each month to detect early signs of economic trends across the country. Data for the latest research was collected from March 3 to 17.
