UK business confidence rallied in May as global financial markets made their recovery from President Donald Trump’s tariff onslaught.
Lloyds Bank business barometer jumped 11 points over the last month to 50 per cent. – marking a nine month high.
The lender surveys 1,200 companies and weighs up the percentage of firms that have a positive outlook against those that are negative, providing a net balance on a scale of -100 per cent to 100 per cent.
The fresh surge wiped out losses made in April as Trump’s ‘Liberation Day’ trade offensive battered businesses optimism levels.
The President’s sweeping tariffs across all the US trading partners sent markets into a period of turbulence. The UK’s blue-chip index the FTSE 100 plunged to a low of 7,679.48p.
But as Trump retreated on parts of the levies, markets quickly rallied. The FTSE 100 closed at 8,716.45p yesterday.
Lloyds cited business confidence’s rebound as coming in line with Trump’s climb down and the recovery of financial markets.
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “The rebound in business confidence suggests that firms might be in a stronger position for the next quarter. The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid the easing of global trade tensions.”
Earlier this week, a US court sounded the alarm that Trump’s tariffs were illegal, dealing a major blow to the President’s isolationist strategy.
Retail confidence bucks trend
Construction firm’s confidence increased to a nine-month high of 56 per cent and the service sector topped a one-year high of 54 per cent.
But retail confidence bucked the trend falling by five points to 40 per cent, its lowest level since January 2025.
City AM reported this week that British retailer’s sentiment had been crushed following pressures from Rachel Reeves’ £26bn employer tax raid and uncertainty sparked in Trump’s trade war.
Ho said the general “positive trends” shown were “important signals for potential growth and resilience in the business community and wider economy.”
“While we know that fluctuations do occur month on month and the global economic outlook remains uncertain, this month’s increase in confidence is an encouraging sign.”
Optimism in the economy grew 12 points to 48 per cent following growth figures surpassing expectations for the first three months of the year. GDP expanded by 0.7 per cent.
But April also marked inflation reaching its highest level since January 2024, as it climbed to 3.5 per cent, according to the Office for National Statistics.
