Business confidence inched up at the end of 2025, according to a new survey, as firms were brought some relief and clarity after the Autumn Budget.
Lloyds Banking Group’s latest Business Barometer found business confidence etched up 10 points by the end of 2025 when compared with the beginning of the year. Half of this came in the last month after firms were brought some ease following heavy tax speculation on the road to the Budget.
Business across the board slammed the brakes on investments as firms braced for a tax raid as questions grew around how Rachel Reeves would balance the books.
Rogue media briefings on the road to 26 November suggested the Chancellor would be staring down a £30bn black hole and fears rose that she would once again turn to businesses to fill the gap.
More than four in five (84 per cent) bosses were worried about the prospect of further tax rises hitting their bottom lines, according to a survey from Helm in October.
But following the Budget – where Reeves launched a £26bn tax raid – Lloyds’ latest release showed optimism towards the economy has inched up to a four-month high at 42 per cent.
The release came prior to the Office for National Statistics (ONS) revealing the economy shrank 0.1 per cent in October as British industries grappled with Budget speculation.
Despite some renewed optimism, businesses have continued to hit pause on hiring plans, with the just 17 per cent planning to expand their headcount.
A number of firms have continued to digest Reeves’ first Budget, in which she launched a £25bn cash grab through employers’ national insurance contributions, which came alongside a 6.7 per cent hike to the minimum wage.
On Monday, jobs site Adzuna also released figures which showed vacancies fell by 6.4 per cent in November to 745,448.
Construction sector’s mixed messages
Lloyds recorded the sharpest improvement in the construction sector, rising 22 points to 61 per cent – the highest level all year.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said the sector “saw a big boost in December”.
But it comes despite analysis from commercial property firm Costar revealing commercial property development in the UK had plunged to its lowest level in over a decade, as tighter monetary conditions and sparse demand continue to weigh on the sector.
Numerous Purchasing Managers Index’s from S&P throughout the year have also shown the construction sector suffered in 2025, with December’s release revealing the industry suffered its worst downturn in five and a half years.
The figures from Lloyds Bank – despite being touted by Sir Keir Starmer in Parliament – have often been viewed as an outlier when compared with that of the Institute of Directors, the Confederation of British Industry or the British Chambers of Commerce.
At the beginning of December, the Institute of Directors showed business confidence had plummeted to post-pandemic lows after the Budget.
The group’s monthly business confidence sharply dropped to -20 from -5 – the second-lowest reading since April 202, a month into the first lockdown.