The Lloyds Bank Business Barometer revealed that the UK business confidence is at an eight-year high.

The confidence increased by eight points to 50%, a level not seen since November 2015. 

The bank said the monthly increase in the business confidence index is largely attributed to businesses’ improved assessment of their own trading prospects and the broader economy.  

The survey, which was conducted from 1 to 16 May, coincided with the release of Q1 GDP data, potentially influencing the positive outlook. 

In May, 62% of businesses anticipated stronger trading prospects, up from 57% in April, while only 8% predicted weaker output, down from 10% the previous month.  

Businesses also displayed increased positivity regarding the wider economy.  

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A net balance of 46% of respondents expressed more optimism compared to three months ago, the highest since September 2021.  

Regarding employment, more than half of the businesses surveyed expect to expand their workforce in the next 12 months, with only 15% anticipating a reduction.  

Additionally, a majority of businesses plan to increase prices to rebuild profit margins for the second consecutive month amid falling energy prices and inflation. 

Sector-specific prospects showed a jump in the construction sector to 58%, the highest in 14 months while the services sector saw expected output rise to 57%. 

Retail sector business activity also improved to 49%, although manufacturing saw a slight dip to 49%. 

Regionally, confidence increased in seven of the UK’s twelve regions, with the South East, Scotland, and the West Midlands experiencing the most significant rises.  

Lloyds Bank commercial banking senior economist Hann-Ju Ho said: “These results highlight a notable improvement in business confidence. Optimism about the economy increased to 46% this month – the highest result since September 2021, when the country was emerging from the Covid-19 pandemic, but before the energy crisis after the invasion of Ukraine. 

“The regional picture has also improved – we have now seen increases in seven of the UK’s 12 regions, where there was previously a more mixed picture. Results in the South East, Scotland and the West Midlands were particularly strong. Across the sectors, there were strong, broad-based improvements in services and construction.” 

Recently, a study by Shawbrook highlighted political uncertainty as the primary concern for SMEs in the UK, with 51% apprehensive about potential changes in government.