Business confidence in the UK rose to its highest level since August last year, driven by a sharp rebound in global financial markets and a narrowing trade tensions between the United States and its partners, according to new data from Lloyds Bank.
Lloyds’ business barometer rose 11 points to 50%, up from 39% in April, rather than the dipping sauce seen last month. Reading is currently the strongest since the summer of 2024.
The lenders said the sharp increase in confidence reflects the improvement in global market sentiment after U.S. President Donald Trump suspended his threat to “reciprocal tariffs” in July. The decision – a ruling to announce tariffs this week, declaring tariffs illegal as investors reassess the outlook for global growth.
“The rebound in business confidence shows that the company may be in a stronger position,” said Hann-Ju Ho, senior economist at Lloyds Commercial Banking. “The rise in confidence is driven by a sharp growth in economic optimism, which reflects the recovery of global trade tensions eased financial markets.”
According to responses from 1,200 companies, the survey also found improvements in transaction prospects and employment intentions. One-third of businesses said they planned to increase their reward compensation by 3% or more, while 65% reported intentions to raise prices for the next year, down 5 points from April. Only 2% say they will cut prices.
The data appears in the mixed inflation picture. The UK inflation rate rose to 3.5% in April, the highest since January 2024, up from 2.6% the previous month. However, economic growth that exceeds expectations helps support business sentiment. GDP grew 0.7% in the first quarter of 2025, and this week the International Monetary Fund raised its full-year UK growth forecast slightly to 1.2%.
Lloyds’ report adds signs that the UK economy is showing resilience, even with concerns about inflation, rising wage demand and the future of global trade policy.
Despite uncertainty, a strong rebound in confidence suggests that the outlook among UK companies entering the second half of the year is more optimistic.
