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Business confidence fell again at the start of the year, according to a tracker frequently cited by Keir Starmer and Rachel Reeves, dealing a blow to the government in its hopes of boosting the UK economy before difficult elections in May.
Starmer and Reeves have frequently pointed to the Lloyds Bank business barometer when speaking about bosses’ confidence in growth plans, with recent examples showing higher confidence levels than other surveys.
But the most recent set of data provided by Lloyds Bank showed business confidence dropping across the two main indicators.
The score for confidence in people’s own firms fell by three points to 44 per cent in January, the survey showed.
Respondents were also less optimistic about the wider UK economy, with sentiment falling by nine points to a reading of 53 per cent.
The survey, which took views from some 1,200 large companies, did show hiring expectations rising.
The net balance for hiring rose for the first time in three months as more than half of firms said they planned to increase headcount.
One fifth of companies expected salaries to grow by more than four per cent this year, researchers also said.
“Firms are reporting confidence in their trading prospects at the start of the year, despite a slight softening of wider economic optimism.,” Hann-Ju Ho, senior economist at Lloyds Bank, said.
“This points to businesses’ ability to manage external risks and a focus on growth opportunities.
“The first rise in confidence in the services sector in seven months is encouraging given the sector’s central role in supporting UK economic activity.”
Business openings inch up
New data deals a blow to the government with months to go until crucial local elections in May that will take the temperature on voters’ support for Labour.
The party is trailing behind both Reform and the Tories in national polling, with the government’s central growth mission set to fall flat as forecasts for this year suggest the UK economy will expand at a slower pace than in 2025.
Data released by the Office for National Statistics (ONS) on Thursday pointed to more positive trends across businesses up and down the country.
The number of firms added to a business register was 71,935 between October and December 2025, an increase of 10 per cent compared to the same quarter a year before.
There was also a smaller decrease in the number of business closures, according to researchers.
Transport and communication industries were highlighted as the areas with the biggest gains in business openings.
