A majority of UK businesses expect a positive start to 2025, according to two economic confidence surveys which show managers planning for growth after a challenging period for the economy.
About 70% of UK businesses expect their turnover to increase over the next year, up from 62% in December 2023. Meanwhile, 73% are confident of greater profitability, according to research from Lloyds bank.
Hann-Ju Ho, a senior economist at Lloyds, said: “It is exciting to see that businesses have ambitious plans for next year and are confident of growth. Overall, businesses have responded well to the changing external environment. While the economic outlook has been challenging, the steps firms are taking to grow should put them in a strong position for success in 2025.”
The survey by the high street bank, which polls 1,200 businesses monthly and claims to provide early signals about UK economic trends, was mirrored by research into expectations in the financial sector, a key driver of the UK economy.
Seven in 10 financial services bosses said they are confident that the government’s plans will drive growth and competitiveness in the sector during 2025, according to data collated by the accounting group KPMG.
The quarterly poll, which tracks sentiment among more than 160 senior financial services executives, found that 68% are confident that the chancellor’s plans to “regulate for growth” and launch a financial services competitiveness strategy in the spring will help to attract foreign financial services investment.
Last month, during her Mansion House speech, Rachel Reeves argued that the UK has been “regulating for risk, but not regulating for growth” as she outlined a reboot of the rules governing Britain’s “crown jewel” financial services industry.
“While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past,” the chancellor said.
“These changes have resulted in a system which sought to eliminate risk-taking. That has gone too far and, in places, it has had unintended consequences which we must now address.”
Karim Haji, global and UK head of financial services at KPMG, said: “Financial services is the backbone of the UK economy, so it’s encouraging to see leaders go into the new year with optimism about the government’s growth plans for the sector.
“However, there are still concerns related to the impact of the budget on growth in financial services. In the first half of 2025 the sector will want to see more details on the government’s competitiveness strategy to really understand how the chancellor is proposing to work with them on strengthening the UK’s attractiveness as a global financial centre.”
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While these two surveys appear to suggest that some UK businesses are more optimistic than widely thought, they do appear to contradict other recent business polls.
Last week, the Confederation of British Industry’s growth indicator survey set out how British companies are predicting a sharp fall in business activity in the new year, with firms preparing to cut down on hiring and reduce output over the next three months.
Separate data also published last week suggested that retailers face a further blow in the new year, with consumer spending forecasts falling by six points, according to the British Retail Consortium. “If these expectations are realised, retailers could find themselves facing a new year spending squeeze just as they unveil their January sales,” said the BRC chief executive, Helen Dickinson.
The Bank of England said this month that it expected the latest data to show that UK growth flatlined in the final three months of 2024, after inflation rose to an eight-month high of 2.6%.