British companies are gearing up for a stronger start to 2025, with fresh data suggesting that the majority expect higher turnover and increased hiring in the new year—welcome news for Labour’s pledge to revive the country’s sluggish economic growth.
Surveys from Lloyds and KPMG indicate that 70 per cent of firms anticipate revenue growth in the first quarter of 2025, marking a rise on sentiment levels from the same period a year ago. Lloyds polled 1,200 companies and found nearly three quarters projected higher profits over the coming 12 months. One in five respondents forecasts revenues climbing by more than 10 per cent, while a quarter expects turnover to increase by between 6 and 10 per cent.
The City’s financial services sector is also showing confidence in Labour’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 an increase to employers’ national insurance contributions from April.
“Financial services is the backbone of the UK economy,” said Karim Haji, global and UK head of financial services at KPMG, noting that half of the surveyed firms intend to recruit more staff in 2025. Nevertheless, challenges remain. A quarter of respondents cited higher NI costs as a potential drag on hiring, while a third warned that finding skilled candidates could still hinder expansion.
Official data revealed Britain’s economy was flat in the third quarter after a strong start to 2024, amid concerns over higher interest rates and global uncertainties. Even so, many economists predict the UK will avoid recession thanks to anticipated interest rate cuts next year and a government spending boost in healthcare and local government. According to traders, four cuts to the Bank of England’s base rate could reduce it to 3.75 per cent, easing borrowing costs for businesses.
Contradicting the KPMG and Lloyds surveys, the CBI reported that its members’ growth expectations for early 2025 remain at their lowest since November 2022, citing persistent uncertainty. Regardless, a fifth of the firms surveyed by Lloyds say they plan to hire new staff and invest in AI or other digital tools, while a quarter aim to raise wages and upskill current employees.
“The sector will want more details on the government’s competitiveness strategy in the first half of 2025,” said Haji. “That clarity will help financial services firms plan more effectively for attracting foreign capital and strengthening the UK’s global standing.”
