UK Business Services Confidence Hits Highest Level Since August 2024

Confidence among UK business and professional services firms has risen to its highest level since August 2024, according to new data from the Confederation of British Industry, offering tentative signs of stabilisation in parts of the economy.

The CBI’s latest quarterly services survey showed optimism in business and professional services improved sharply to minus 3 in February, up from minus 50 in November. The reading marks the strongest sentiment in more than a year and suggests that the steep decline seen throughout much of 2024 may be easing.

However, the picture remains uneven. Consumer facing services such as hospitality, leisure and retail related activities continue to report weak confidence. Sentiment in that segment stood at minus 45, only marginally better than minus 47 in the previous quarter. Analysts say fragile household finances and slowing wage growth are continuing to weigh on spending.

The survey results indicate that while corporate focused services are stabilising, overall economic momentum is still subdued. Employment growth remains cautious and investment intentions are restrained as firms navigate regulatory changes and cost pressures.

Separate figures released by the British Retail Consortium offered a slightly brighter outlook for consumers. Retail sentiment rose to its highest level since June 2025, hinting at a potential improvement in household confidence. Even so, industry leaders warned that the recovery remains delicate amid sluggish growth and rising unemployment.

The Bank of England recently downgraded its growth forecast for 2026 to 0.9 percent, reflecting ongoing economic headwinds. Unemployment is hovering near a decade high and pay growth has slowed from the rapid increases recorded during the inflation surge.

Some business groups remain concerned about policy uncertainty. The government’s Employment Rights Act, which aims to strengthen worker protections and guarantee hours for certain part time staff, has prompted debate within the service sector. Employers argue that additional regulatory burdens could raise costs at a time when margins are already tight.

Chancellor Rachel Reeves is expected to present updated fiscal projections soon, though she has indicated that no new tax changes are planned. Previous budget measures, particularly higher employment taxes introduced in 2024, had dampened business confidence.

The CBI survey was based on responses from 351 firms collected between late January and mid February. Economists say that while the improvement in professional services confidence is encouraging, sustained growth will depend on stronger consumer demand, stable inflation and clarity around future policy.