Most UK businesses are optimistic about their prospects for 2025, with new surveys indicating plans for growth despite lingering economic challenges. According to two key economic confidence surveys, many firms are preparing for a rebound after a difficult period for the UK economy.

Lloyds Bank’s monthly survey of 1,200 businesses revealed that about 70% expect their turnover to rise in the coming year, an increase from 62% recorded in December 2023. Additionally, 73% of respondents expressed confidence in achieving greater profitability.

“It is exciting to see that businesses have ambitious plans for next year and are confident of growth. Overall, businesses have responded well to the changing external environment. While the economic outlook has been challenging, the steps firms are taking to grow should put them in a strong position for success in 2025.”
Hann-Ju Ho, a senior economist at Lloyds

The financial services industry, a cornerstone of the UK economy, is also expressing cautious optimism. A survey conducted by KPMG found that seven in 10 financial services executives believe government initiatives will enhance growth and competitiveness in 2025.

The quarterly poll surveyed over 160 senior executives and highlighted confidence in Chancellor Rachel Reeves’ plans to “regulate for growth” and unveil a financial services competitiveness strategy in the spring.

During her Mansion House speech last month, Reeves acknowledged the need to strike a balance between risk and opportunity in the financial sector.

“While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past.”
Rachel Reeves

She emphasized that some post-crisis measures had unintended consequences, curbing risk-taking to the point of stifling growth. Reeves outlined her vision for reforming the sector to attract foreign investment and bolster the UK’s standing as a global financial hub.

Karim Haji, KPMG’s global and UK head of financial services, commented: “Financial services is the backbone of the UK economy, so it’s encouraging to see leaders go into the new year with optimism about the government’s growth plans for the sector.”

However, he cautioned that greater clarity on the government’s strategy would be needed in early 2025 to reassure industry leaders.

Contrasting Views Temper Optimism

While these surveys paint a positive picture, other data present a more cautious outlook. The Confederation of British Industry’s (CBI) growth indicator survey, released last week, predicted a sharp decline in business activity early in the new year.

Companies surveyed by the CBI reported plans to reduce hiring and cut output over the next three months.

Retailers, in particular, are bracing for challenges. The British Retail Consortium (BRC) forecast a six-point drop in consumer spending, warning that January sales may fail to provide the expected post-holiday boost.

BRC chief executive Helen Dickinson said: “If these expectations are realised, retailers could find themselves facing a new year spending squeeze just as they unveil their January sales.”

Adding to the mixed picture, the Bank of England noted that UK economic growth likely stagnated in the final quarter of 2024, with inflation climbing to an eight-month high of 2.6%.

Despite concerns from some sectors, the overall sentiment suggests that many UK businesses are gearing up for growth in 2025. The divergence between upbeat financial leaders and more cautious retail and industrial forecasts underscores the complexity of the economic landscape.

As businesses and policymakers navigate these challenges, the government’s ability to implement its growth strategies effectively will likely play a pivotal role in shaping outcomes.