Boosting Business Spirits in a Recessional UK
Grant Thornton UK LLP’s latest Business Outlook Tracker has shaken off the gloom that came with the country’s technical recession late last year. Even while the economy has dipped, business leaders are tightening their belts and opening their wallets, thanks to steady inflation and a pause in interest‑rate hikes.
Revenue Expectations Take a Leap
- Revenue‑growth optimism surged by +21 percentage points from December to an impressive 79 %.
- That’s the highest reading since August of last year and +8 pp above the rolling average.
- Pessimism around revenue growth has plummeted to one of the lowest levels ever recorded.
Confidence Beyond Revenue
- Funding confidence is booming: a jump of +22 pp to 79 %, the strongest seen in the Tracker.
- Two-thirds of respondents (69 %) anticipate higher profits—an increase of +23 pp from December, the best level since January 2021.
- Expectations of falling profits dropped by –12 pp.
Investment Outlook Gets a Wake‑Up Call
- More firms are planning to boost investment across the board.
- Largest gains are projected in:
- Skills development – +14 pp
- International market growth – +14 pp
- Recruitment – +12 pp
- Technology – +10 pp
What’s Next – Budget & Politics
- Business optimism about the UK economy is up by +17 pp to 75 % as the Chancellor’s Budget approaches on 6 March.
- Confidence sits well above the 69 % rolling average.
A Word from Grant Thornton’s Economic Guru
Schellion Horn, Partner and Head of Economic Consulting, said:
“It’s encouraging to see increased levels of optimism across our Tracker in this round.
The number of respondents optimistic about the UK economy in February is much higher than we’ve seen recently, and higher than the rolling average since 2021, which shows a renewed sense of confidence in the market since December.
While it’s now been confirmed that the UK fell into a technical recession at the end of last year, businesses still have good reason to be feeling optimistic.
Inflation has more than halved from its double‑digit high and remains steady, and interest rates seem to have reached their peak and are expected to drop through this year.
Renewed confidence in the outlook of the UK economy in turn boosts confidence about businesses’ own growth potential and ability to increase investment across core areas – this is a recurring trend that we’ve seen in our Tracker.
But it’s not just confidence in the UK’s economic performance that drives this, businesses also want certainty. Certainty in how they expect the economy to perform and certainty around economic policy. It’s much harder for businesses to plan and confidently make investment decisions if there’s uncertainty.
While optimism is high, with an upcoming Budget in March and election likely at some point this year, businesses need to seize this opportunity. The government and major parties are listening, so businesses should prioritise outlining what they want and need from government, to boost growth and productivity across the country.”
What You Should Do Now
- Grab the chance—draft a clear brief on what you need from the government.
- Use the optimism spike as a springboard for new hires, tech upgrades, and global expansion.
- Keep an eye on the budget, because the next policy moves could be the game‑changer you’ve been waiting for.
Stay tuned and keep the momentum alive—great things are on the horizon, and the business landscape is buzzing with opportunity!
