British businesses are poised for a stronger start to 2025, with new data suggesting a majority expects higher turnover and increased hiring in the new year – welcome news for Labour’s pledge to revive the country’s sluggish economic growth.
Surveys by Lloyds and KPMG indicate that 70 per cent of companies expect revenues to grow in the first quarter of 2025, representing a rise in sentiment levels compared to the same period last year. Lloyd’s surveyed 1,200 companies and found that nearly three-quarters of them expected higher profits over the next 12 months. One in five respondents expect revenue to rise by more than 10 percent, while a quarter expect turnover to increase by between 6 and 10 percent.
The city’s financial services sector is also showing confidence in the Labor Party’s plans to boost competitiveness and attract more foreign investment. Two-thirds of the 160 financial services leaders surveyed by KPMG say they are optimistic about the government’s new financial services strategy, despite looming pressures such as increased National Insurance contributions for employers from April.
“Financial services are the backbone of the UK economy,” said Karim Haji, head of global and UK financial services at KPMG, noting that half of the companies surveyed intend to hire more staff in 2025. However, challenges remain. A quarter of respondents cited high National Insurance costs as a potential barrier to recruitment, while a third warned that finding skilled candidates may still hinder expansion.
Official data revealed that the British economy stabilized in the third quarter after a strong start until 2024, amid concerns about rising interest rates and global uncertainties. However, many economists expect the UK to avoid a recession thanks to expected interest rate cuts next year and increased government spending in healthcare and local government. According to traders, four cuts in the Bank of England’s base interest rate could bring it down to 3.75 percent, easing borrowing costs for companies.
In contrast to the KPMG and Lloyds surveys, the CBI reported that its members’ growth forecasts for early 2025 remain at their lowest levels since November 2022, indicating continued uncertainty. Regardless, a fifth of companies surveyed by Lloyd’s say they plan to hire new staff and invest in artificial intelligence or other digital tools, while a quarter aim to raise wages and improve the skills of existing employees.
“The sector will need more details about the government’s competitiveness strategy in the first half of 2025,” Haji said. “This clarity will help financial services firms plan more effectively to attract foreign capital and strengthen the UK’s global standing.”