Encouraging signs for businesses, yet growth remains slow. Concerns over and impact of energy prices are subsiding

Three prominent business sentiment surveys indicate that UK bosses are much more optimistic about 2024 than last year.

According to The British Chambers of Commerce (BCC) quarterly economic survey (the UK’s largest and longest-running independent business survey) business confidence improved in Q4’23 with 56% of bosses expecting an increase in turnover in the next 12 months, up from 53% in the previous quarter (1).

Business confidence index is at its highest level since Q1’22, when Covid restrictions were lifted.

Meanwhile, PwC’s 27th annual CEO survey revealed that UK chief executives are significantly more optimistic about the prospects for the economy this year than they were a year ago (2).

CEOs were deeply concerned with the state of the UK economy last year with only 9% expecting an improvement. However, the percentage of respondents expressing more optimism for 2024 rose to 39%. PwC said that the improved confidence may partly explain why 53% of CEOs expect to make at least one major acquisition in the next three years, whereas just 24% said they made an acquisition in the previous three years.

Sentiment among UK finance chiefs has also improved. The latest Deloitte CFO Survey shows a more optimistic trend emerging with confidence rising for the second consecutive quarter (3). 

Growing confidence in the economy and a more positive outlook for businesses is likely driven in large part by a more stable macroeconomic and political environment than a year ago.

The rate of inflation has been easing throughout 2023, and as a result, the Bank of England paused its most aggressive series of interest rate increases in decades. Following 14 consecutive rate hikes, the Bank set rates at 5.25% in August 2023 and has not changed them since then.

With inflation cooling, largely driven by lower energy prices, and weak economy growth, economists are predicting a possible rate cut in May or June (4).