Relief for Reeves as business outlook brightens for new year
UK businesses have defied the negative sentiment which has defined the latter part of the year and predicted an upswing in 2025.
More UK businesses are expecting a stronger start to 2025 than they did entering 2024, new research from Lloyds Business Barometer has found.
Seven in ten UK businesses expect to see their turnover increase over the next year, up from 62 per cent in December 2023, while nearly three quarters are confident of greater profitability.
In what will surely be a relief to Rachel Reeves, more than half of firms said that driving revenue and profitability is their top priority, with a third focused on upskilling their staff.
Senior Economist at Lloyds, Hann-Ju Ho, said it was “exciting” 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,” Ho said.
The Autumn budget caught many businesses by surprise. While the feared hike to corporation tax did not materialise, Chancellor Rachel Reeves increased the tax employers have to pay on their employees’ wages – a move which will add a significant bill to many firms’ balance sheets.
However, the shock seems to have worn off. Plus, much of the UK’s growth next year will be driven by the £40bn of additional spending announced in the Budget, which the ING predicts will play out through higher public sector wages and employment.
In fact, despite lower-than-expected GDP growth at the end of this year, the OECD expect the UK economy to grow twice as fast as its European counterparts next year.