February 2, 2026 – Monday – London Business confidence across the United Kingdom strengthened in January, offering cautious optimism that Britain’s economy may be stabilising after months of uneven performance and inflationary pressure.
A closely watched survey released on Monday showed a notable rebound in sentiment among company directors, with firms reporting improved expectations for growth, hiring, and investment in the first quarter of the year. The data suggests businesses are adjusting to tighter financial conditions and global uncertainty, while signs of resilience in domestic demand are beginning to emerge.
Executives across manufacturing, construction, and services industries said customer activity improved compared with late 2025, when higher borrowing costs and weak consumer spending weighed heavily on outlooks. Many firms reported stronger order books and renewed discussions about expansion plans.
The improvement comes as policymakers continue to balance inflation control with economic growth. Britain’s inflation rate has eased from its recent peaks but remains above the Bank of England’s target. While borrowing costs remain elevated, businesses appear to be adapting to the new financial environment.
Economists cautioned that optimism remains fragile. Global supply chain vulnerabilities, geopolitical tensions, and potential energy price volatility could still disrupt recovery momentum. However, the latest figures suggest companies are regaining confidence in medium-term prospects.
Employment expectations also improved modestly, with more firms indicating plans to recruit staff over the coming months. Wage pressures, though still present, are reportedly less intense than during previous quarters.
Government officials welcomed the data, describing it as evidence that economic policies are creating a more predictable environment for business planning. Critics, however, argued that structural challenges—including productivity gaps and regional inequality—continue to limit long-term growth potential.
For now, the January rebound signals a shift in mood among British businesses. Whether that confidence translates into sustained economic expansion will depend largely on inflation trends, global conditions, and upcoming monetary policy decisions.
