British Firms Optimistic About 2025, Expecting Revenue Growth and Increased Hiring

British companies are showing increased optimism for the start of 2025, with new surveys suggesting that many expect higher turnover and increased hiring, providing a boost to Labour’s goal of rejuvenating the country’s sluggish economic growth.

Surveys conducted by Lloyds and KPMG reveal that 70% of firms are anticipating revenue growth in the first quarter of 2025. This marks an improvement in sentiment compared to the same period last year. Lloyds, which polled 1,200 companies, found that nearly three-quarters of respondents are projecting higher profits over the next 12 months. Of those, one in five expects revenues to increase by more than 10%, while a quarter forecast a rise of between 6% and 10%.

The financial services sector is also displaying confidence, with two-thirds of the 160 financial leaders surveyed by KPMG expressing optimism about the government’s new financial services strategy. Despite challenges such as the looming increase in employers’ national insurance contributions from April, the sector is bullish on Labour’s plans to boost competitiveness and attract foreign investment. “Financial services is the backbone of the UK economy,” said Karim Haji, global and UK head of financial services at KPMG. Haji also noted that half of the firms surveyed plan to recruit more staff in 2025.

However, some hurdles remain. A quarter of respondents to the KPMG survey cited higher national insurance costs as a potential barrier to hiring, while a third warned that difficulties in finding skilled candidates could also impede expansion.

Despite these positive forecasts, official data showed that the UK’s economy stagnated in the third quarter of 2024 after a strong start to the year, as concerns over high interest rates and global uncertainties continue to weigh on growth. Still, many economists predict that the UK will avoid a recession, with anticipated interest rate cuts next year and increased government spending in healthcare and local government. Traders are forecasting four cuts to the Bank of England’s base rate, potentially reducing it to 3.75%, which would ease borrowing costs for businesses.

In contrast to the optimism seen in the Lloyds and KPMG surveys, the Confederation of British Industry (CBI) reported that its members’ growth expectations for early 2025 remain at their lowest point since November 2022, citing ongoing uncertainty.

Despite these mixed outlooks, a fifth of the firms surveyed by Lloyds plan to hire new staff and invest in AI or digital tools, while a quarter aim to raise wages and upskill existing employees. Haji emphasized that further clarity on the government’s competitiveness strategy in 2025 will be key for financial services firms to effectively plan and attract foreign capital.