UK business confidence has fallen to its lowest level in 17 months following a speech by Labour politician Andy Burnham, according to a Lloyds Bank survey.
The drop in corporate optimism reported in Lloyds Bank's monthly business barometer marks the lowest score since April 2025. The survey's findings strike a sharp contrast with Prime Minister Sir Keir Starmer's pledge to restore a higher level of growth and prosperity to Britain.
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said the fall in optimism was driven by rising global energy prices and increased global uncertainty. Lloyds Commercial Banking is the specialized business lending division of Lloyds Banking Group, one of Britain's largest commercial banks.
Business groups yesterday gave a broad welcome to Burnham's ambition following his key party conference speech. However, commercial leaders urged him to give beleaguered firms breathing space in the upcoming Budget from the growth-killing costs that have already been piled on by Labour.
Rain Newton-Smith, chief executive of the Confederation of British Industry, said firms must be given "breathing space from the cumulative cost pressures holding back investment and hiring." The Confederation of British Industry is the UK's premier business lobbying organization, representing thousands of companies across the national economy.
Small business borrowing and Budget uncertainty
The Lloyds findings chimed with comments from the boss of Close Brothers, a merchant lender that provides financial services and commercial loans to many of Britain's small businesses.
Speaking to the Daily Mail about the struggles corporate leaders are facing, Mike Morgan, the head of Close Brothers, pointed to rising borrowing costs and mounting uncertainty ahead of the Budget. He said: "It has been a difficult year for all businesses," adding: "It would be good to get some pro-business growth ideas coming through."
The Prime Minister's speech also left some figures in the City of London disappointed. Kallum Pickering, an economist at broker Peel Hunt, noted the "total absence of market-friendly or genuinely pro-growth initiatives." The City serves as the UK's central financial hub, housing institutional investors, stockbrokers, and global investment banks.
2>Gilts sell-off and bond market reaction
Bond markets were also unimpressed by the political address, with state borrowing costs ticking higher. Yields on ten-year UK government bonds, known as gilts, spiked to more than 5.42 per cent, coming just shy of the 19-year highs seen a day earlier, before ending slightly lower on the day.
The market pressure followed an auction earlier in the day where Britain sold £4.25 billion of ten-year gilts at the highest yield since 1999. Gilts are fixed-income debt securities issued by HM Treasury to finance public spending, with higher yields representing increased costs for government borrowing.
UK businesses, which have been battered by employer National Insurance hikes, minimum wage increases, and a broad raft of new workers' rights under the Labour government, are hoping they will not have to face further punishment in the Budget. National Insurance is a mandatory tax on earnings paid by employers and workers to finance public services.
