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British economy: Confidence at nine-month high – retail boom!
UK economy hits nine-month high in confidence. Positive mood thanks to market recovery and reduced tariffs.
British economy: Confidence at nine-month high – retail boom!
UK business confidence reached a notable rise in May 2025, reaching its highest level since August 2024. According to that Lloyd's Business Barometer The sentiment index rose by eleven points to 50, which is the highest level since Labor Prime Minister Keir Starmer took office. This increase follows a period in which confidence fell in April due to tariff increases by US President Donald Trump.
The survey, which captured the voices of 1,200 companies, shows the economy's response to a gradual stabilization of global markets. The British government's assured announcement of the reduction of tariffs on British cars and the abolition of tariffs on aluminum and steel is contributing to the positive market development. Additionally, on May 8, Trump was confirmed in his decision to suspend the threat of so-called “reciprocal tariffs” until July, which has significantly improved market sentiment.
Robustness despite challenges
Despite high inflation, which rose to 3.5% in April 2025 - the highest level since January - the British economy is showing encouraging resilience. First-quarter growth data showed gross domestic product increased 0.7%, the fastest rate in over a year. BMMagazine also reports that confidence has increased due to the positive trade outlook and improving hiring intentions.
An interesting finding from the survey is that a third of companies plan to provide wage increases of 3% or more. At the same time, 65% of companies intend to increase prices in the coming year, although this represents a decrease of five points compared to April. Only 2% of companies plan to reduce prices, indicating greater confidence in economic stability.
Outlook for the future
The increase in business confidence also points to a stronger position for companies in the next quarter. Most of the economic recovery came from the service sector, while manufacturers continue to report a decline in export demand. The Financial Times points out that the recovery in financial markets is contributing significantly to improving economic optimism.
Although the UK economy is under pressure amid ongoing risks from US trade policy, the latest data provides reasons for optimism. The discussion about tax increases and budget cuts, which Finance Minister Rachel Reeves raised in late 2024, could potentially be defused by the improving economic climate. The overall situation shows an interesting turn of events that many players in the British economy will be following closely.