Optimism fell across key indicators in Lloyds Bank barometer despite rising hiring expectations
Keir Starmer has previously namechecked Lloyds Bank business barometer surveys(Image: Carl Court/PA Wire)
Business confidence declined once more at the beginning of the year, according to a tracker regularly referenced by Keir Starmer and Rachel Reeves, delivering a setback to the government’s aspirations of boosting the UK economy ahead of challenging elections in May.
Starmer and Reeves have repeatedly highlighted the Lloyds Bank business barometer when discussing executives’ faith in growth strategies, with recent figures demonstrating stronger confidence levels than alternative surveys.
However, the latest data released by Lloyds Bank revealed business confidence slipping across both primary indicators.
The rating for confidence in people’s own companies decreased by three points to 44 per cent in January, the survey demonstrated. Participants were also more pessimistic about the broader UK economy, with sentiment declining by nine points to a measurement of 53 per cent, as reported by City AM.
The survey, which gathered opinions from approximately 1,200 major companies, did indicate recruitment expectations increasing.
The net balance for employment rose for the first time in three months as more than half of businesses stated they intended to expand their workforce.
One fifth of enterprises anticipated wages to increase by more than four per cent this year, researchers also revealed.
“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.”
The new data delivers a setback to the government with months remaining until pivotal local elections in May that will gauge voters’ backing for Labour.
The party is lagging behind both Reform and the Tories in national polling, with the government’s core growth mission poised to fall short as projections for this year indicate the UK economy will expand at a more sluggish rate than in 2025.
Figures published by the Office for National Statistics (ONS) on Thursday highlighted more encouraging patterns across enterprises throughout the nation.
The number of companies added to a business register reached 71,935 between October and December 2025, representing a rise of 10 per cent compared to the corresponding quarter the previous year.
There was also a reduced decline in the number of business closures, according to researchers.
Transport and communication sectors were identified as the areas experiencing the most substantial increases in business launches.