Business confidence holds, but sentiment varies across firm sizes
Business confidence rose 11 points to 55% in March, driven mainly by smaller firms, according to the latest Lloyds Business Barometer.
This month’s survey was conducted between 2–16 March, with more than 90% of responses in the first week, before the potential impact in the Middle East filtered through to smaller businesses. Larger firms, by contrast, reported lower confidence, reflecting differing exposures to global conditions.
Amanda MurphyCEO, Lloyds Business & Commercial BankingWhile businesses are adept at reacting to uncertain, fast-moving conditions, this month’s results show an interesting divergence in sentiment. Smaller businesses may have remained confident because they had not yet seen an immediate change in customer demand or supply chain disruption. Larger firms, however, read global events more cautiously because of their closer exposure to global markets. With most responses coming in the very early stages of the Middle East conflict, we’ll be watching closely to see how confidence evolves.
Trading outlook varies across business size
Businesses’ confidence in their own trading outlook rose in March, with 66% (up four points) of firms feeling positive about their trading prospects in the next 12 months. 6% of firms felt negative about their trading outlook, three points lower than February, resulting in a net balance of 60%.
Smaller businesses saw a five-point increase in trading outlook compared to February. However, larger businesses saw a reduction in confidence in their trading outlook, while SMEs remained stable, up one point in March. Firms who felt positive anticipate stronger customer demand, increased investment and improved supply chain conditions. In contrast, those who felt negatively cite higher cost pressures, economic uncertainty and increased competition.
Confidence in wider economy strengthened in smaller firms
Optimism in the wider economy rose for a second consecutive month. 65% of firms (up seven points) said they were feeling more optimistic towards the economy, while 15% (down seven points) were feeling more negative. This led to the net balance increasing by 14 points to 50%.
Confidence fell among SMEs and larger businesses citing rising cost pressures, global uncertainty and tighter financial conditions as the main drivers for pessimism in the economy. However smaller businesses were more optimistic, citing increased customer demand as the main driver.
Hann-Ju HoSenior Economist, Lloyds Commercial BankingFirms continue to report cost pressures and economic uncertainty, with some mindful of potential disruption linked to global events. Despite this backdrop, confidence edged higher in March, helped by firmer demand and a more positive trading outlook by smaller businesses.
Regional insights
Business sentiment rose across ten out of twelve UK regions and nations. Firms in the West Midlands were the most confident driven by stronger customer demand and desire for increased capacity. Yorkshire & Humber and the East Midlands were the next most confident.
Region/Nation | MArch 2026 | Change (pp) | Rank Change vs Feb |
|---|---|---|---|
West Midlands | 66% | +32 | ▲9 |
Yorkshire & Humber | 62% | +22 | ▲5 |
East Midlands | 62% | +6 | ▲1 |
London | 61% | +2 | ▼3 |
Northern Ireland | 59% | +1 | ▼3 |
East of England | 57% | +21 | ▲3 |
North East | 54% | -1 | ▼2 |
North West | 53% | -5 | ▼6 |
Scotland | 51% | +10 | ▼3 |
South West | 48% | +30 | ▲2 |
South East | 45% | +7 | ▼3 |
Wales | 30% | +1 | ▼1 |
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