Business confidence hit its lowest level at end of 2024

Business confidence in the UK has fell to its lowest level at the end of 2024, dropping two points to 39%, according to the latest Lloyds Business Barometer.

Despite the fall, 55% of businesses expressed optimism about the broader economy, with nearly two-thirds anticipating stronger output. However, 19% of respondents plan to reduce their workforce, the highest figure in nine months. Additionally, 64% of companies expect to raise prices, complicating efforts to curb inflation.

Almost two-third of respondents anticipated stronger output, though 11% expected less business activity in the new years, causing trading prospects to fall to their lowest result since June.

More companies are also planning to increase their prices this year, in a blow to efforts to cut inflation.

Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “In the last few months overall confidence has fallen incrementally, and in December the trend continued as it fell by 2 points to 39%. While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs.”

“The key difference in this month’s results is that the fall in confidence is driven by firms’ own trading prospects which have proven to be resilient over the last quarter. There was, however, more positivity regarding the wider economy and, going into 2025, this offers some hope if companies continue to feel confident about the economy.

“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be a significant for this time of year.”

Paul Kempster, Managing Director for Relationship Management, Lloyds Bank Business & Commercial, said: “The mixed results in trading prospects and economic optimism suggest that while businesses feel they are facing some challenges, there is still some opportunity in regard to the wider economy. Although overall confidence dipped this month, we’re still optimistic that firms’ trading prospects will return to the levels seen earlier this year.

“The regional picture is also mixed with significant increases in confidence in Scotland and Northern Ireland, but more acute falls in confidence in the North-East. As we enter the New Year, and businesses across the country consider their plans for 2025, we are committed to helping them to navigate their journey and prosper.”