More than half of UK businesses anticipate an increase in turnover over the next year, marking the highest proportion since the beginning of 2022 and indicating a tentative recovery in business confidence.
The British Chambers of Commerce's latest quarterly survey revealed that 56% of the 5,000 surveyed companies predict growth in revenues in the coming 12 months. Over 90% of the businesses surveyed were small or medium-sized, employing fewer than 250 individuals. This percentage reporting improved sentiment is higher than the 53% recorded in the third quarter of 2023, signalling companies' optimism about benefiting from an economy with decreasing inflation and a potential reduction in interest rates in 2024.
Although inflation dropped to a two-year low in November, 47% of small businesses expect prices to increase over the next 12 months, while 49% anticipate prices to remain the same. Consumer price inflation has decreased to 3.9%, the lowest since 2021, and forecasts suggest it is on track to reach 2% by May. While falling inflation does not decrease overall price levels, it does indicate a slowdown in the pace of price increases.