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UK business confidence has hit a nine-year high in 2024, according to a closely-watched survey, although firms’ economic optimism dipped ahead of expected tax hikes in the Budget.
Lloyds Bank’s latest Business Barometer put overall business confidence at a 45 per cent year-to-date average, well above the long-term average of 29 per cent. Business confidence previously hit 50 per cent in 2015.
The fresh peak comes after the most successful quarter of the year, with average UK business confidence hitting 49 per cent between July and September.
That compares to 43 per cent and 44 per cent in the first two quarters of 2024 respectively.
September’s reading for September came at 47 per cent, down from 50 per cent in July and August – which marked the highest numbers since November 2015.
Lloyds said the monthly decline was driven by a fall in economic optimism, although confidence is still comfortably above the 36 per cent seen during the same period last year.
British firms are bracing for fiscal shake-ups in Labour’s inaugural Budget on 30 October. The government has suggested that it may increase some taxes to plug an alleged £22bn “black hole” in the public finances left by the Conservatives.
According to Lloyds, economic optimism is at 40 per cent, a year-to-date high and up from 27 per cent during the same period last year. Five years ago, economic optimism languished at just one per cent.
The survey also suggested that positive sentiment among firms about their output expectations was broadly steady.
Businesses’ own trading prospects for the next 12 months are at 51 per cent so far this year, with September’s figure of 56 per cent matching the 2024 high and up from 41 per cent a year prior.
“As we start the last quarter of 2024, these results are hugely encouraging for our economy and overall business confidence,” said Hann-Ju Ho, a senior economist at Lloyds.
“Firms remain resilient with figures being reached that have not been seen for almost a decade, before the series of shocks to the economy, including the Covid-19 pandemic and energy crisis.
“While there may be future economic headwinds to navigate, business should be going into year end with a strong sense of optimism.”
Speaking on the BBC’s Sunday with Laura Kuenssberg programme, Lloyds chief executive Charlie Nunn reiterated the bank’s positive view.
“The last few years have been difficult,” he said. “But actually 2024 has been the turn that we have seen in terms of most people in the country feeling more financially secure.
“So there’s more savings in deposit accounts, there’s less people struggling with loans, and actually business confidence is at a nine-year high.”
Uncertainty remains
Although Lloyds’ findings paint a bullish outlook for the UK economy, another influential survey suggested a downtick in sentiment and rise in uncertainty among top executives.
Deloitte’s latest poll of UK chief financial officers found that corporate confidence edged lower in the third quarter of 2024, following a strong bounce after the general election.
A net six per cent of finance chiefs said they felt more optimistic about the financial prospects of their businesses now than three months ago, when the reading was net 23 per cent. Still, confidence is running above the long-term average of net negative one per cent.
Almost a third (31 per cent) of CFOs rated the level of external financial and economic uncertainty facing their business as “high or very high”, compared to 23 per cent last quarter.
“Corporate sentiment has edged down but is running at above average levels,” said Ian Stewart, chief economist at Deloitte.
“Geopolitical uncertainty is the biggest worry, and we are seeing rising levels of concern about the possibility of a hard landing in the US.”
Deloitte surveyed 68 CFOs, including 32 from FTSE 350 companies.