Business confidence across the UK has climbed to its highest level in nearly two years, driven by growing output despite significant economic uncertainties ahead of the Autumn Budget.
Advisory firm BDO reports that its business optimism index jumped to 94.22 in August, reaching its strongest point since just before the 2024 Autumn Budget.
The services sector was the primary engine behind this surge in confidence, with resilient activity helping to sustain growth across the broader economy.
BDO’s output index rose to 98.37, marking the highest level recorded since January 2025 and signalling a meaningful rebound in business activity.
The UK’s travel and leisure industries proved particularly strong performers, benefitting from robust seasonal demand during the summer months.
Weak export demand for services, however, acted as a drag on the headline output index, tempering what would otherwise have been a more impressive overall reading.
BDO’s employment index remained broadly unchanged at 93.10, having only marginally recovered from a recent 15-year low.
Hiring across the UK economy remains subdued, but BDO found that the rate of job losses is slowing, pointing to a jobs market that is beginning to stabilise.
Analysts at the advisory firm warned that the positive momentum could be undermined if Chancellor John Healey fails to address the rising costs faced by British businesses in next month’s Budget.
The British Chambers of Commerce has urged the government to tackle the cost of doing business, warning that the average firm’s overheads have risen by 70 per cent over the last decade.
A group of prominent City figures, including Lord Stuart Rose and John Caudwell, have backed a campaign calling on the government to halt the “creep of taxes” weighing on British firms.
Hospitality and retail businesses have specifically urged Healey to ease the cost of employment and reform the business rates system, which they argue is pushing high street businesses to the wall.
Scott Knight, BDO’s head of growth, said: “With output on the up, it’s no wonder businesses are starting to feel a little less gloomy. However, all eyes are on Burnham and the Autumn Budget.”
Knight added: “Practical measures to reduce costs and unlock investment are essential if the Government is to turn sentiment into meaningful growth.”
The coming Budget will prove a critical test of whether this resurgent business confidence can be sustained or will once again retreat in the face of policy uncertainty.