Key facts
- UK business confidence rose to 53% in August, the highest since March.
- Optimism about the wider economy jumped to 49%.
- Stronger customer demand and easing cost pressures are driving the confidence.
- Despite rising energy prices and geopolitical conflict, businesses remain optimistic.
- Household energy bills are expected to increase by up to 4% in October.
UK business confidence has reached its highest point since March, with the Lloyds Business Barometer showing a four-point rise to 53% in August. This increase is attributed to resilient consumer spending and a more optimistic outlook on the wider economy, which saw a seven-point jump to 49%.
According to Amanda Murphy, chief executive of Lloyds' commercial arm, businesses are experiencing stronger customer demand and are more confident about their own trading prospects. While operating in a challenging environment, easing cost pressures and a reduced expectation of future price hikes are allowing firms to shift focus from managing headwinds to pursuing growth.
The positive sentiment persists despite the ongoing conflict in Iran, which has disrupted oil and gas trade through the Strait of Hormuz and impacted supply chains for goods like fertilizer. Energy prices have risen significantly, with Brent crude climbing over 40% year-to-date. Household energy bills are also set to increase by up to 4% from October.
Companies' trading outlook improved to 58%, a three-month high, with two-thirds expecting increased output in the coming year. The number of firms planning price increases has fallen to just over half. This contrasts with previous summers where Budget speculation had dampened private sector morale. New Chancellor John Healey has so far avoided public discussion of potential tax rises ahead of his October fiscal event.