Lloyds Business Barometer February 2026
Overall business confidence held in February at 44%, with increased optimism in the wider economy offset by lower confidence in businesses’ own trading prospects, according to the latest Lloyds Business Barometer.
In February, optimism in the wider economy strengthened, rising eight points to 36%, regaining part of the softening seen in January. Firms’ confidence in their own trading reduced by six points to 53%, back to levels seen at the end of 2025, meaning overall business confidence remained at 44%, which remains significantly above the long-term average of 30%.
The survey of 1,200 businesses from across the UK was conducted between 2-19 February.
Hiring intentions soften
Firms’ hiring plans for the year ahead reduced this month, with the net balance falling six points to 35%, the lowest level since January last year. 51% now plan to increase headcount and 16% plan to reduce, nearing the figure that was seen in December 2025.
Wage growth expectations eased slightly, with nearing half (45%) of firms expecting pay increases between 2-4%, while 16% (down five points) expecting salaries to grow by 4% or more in 2026.
Price expectations rise
Businesses’ price expectations moderately increased again for the second time in six months, with 67% of businesses, up from 64%, expecting to raise prices with 2% planning to reduce them resulting in a net balance of 65%.
Amanda Murphy, CEO for Lloyds Business and Commercial Banking said: “Business confidence holding steady at 44% is a sign of the resilience we’re seeing across the UK and it’s encouraging that firms are feeling more upbeat about the wider economic environment. Although businesses confidence in their own trading expectations eased slightly, many are preparing for growth, pointing to a more assured year ahead.
“It’s also positive to see more firms rebuilding their margins as price expectations ticked up in February. While some cost pressures remain, the fact that businesses plan to adjust prices responsibly shows a growing sense of confidence and a firmer footing for future investment.”
Hann-Ju Ho, senior economist, Lloyds Commercial Banking: “It’s encouraging to see optimism in the wider economy returning, although with a small reduction in firms’ confidence in their own trading prospects. The majority of the survey results were collected following the Bank of England’s close decision to hold interest rates at its February meeting, signalling potential easing ahead, which may have alleviated business concerns, including those around cost pressures. While the rise in pricing expectations to a six month high may indicate firms are looking to rebuild their margins in 2026.
Sector highlights
The construction sector saw strong gains in overall confidence. In February, confidence was up 14 points to 60%, with manufacturing also seeing a boost, up five points to 37%. Confidence for retail and service sector firms softened slightly, each down two and three points respectively.
Regional outlook
Seven of the UK’s twelve regions and nations saw a rise in confidence in February. The strongest monthly gains were seen in the South East, North East and East Midlands. London remains the most confident region at 59%, with the North West sitting at the number two spot with 58%.
“It’s also great to see confidence increase for manufacturers and construction firms as they are key for UK growth.”