Business Barometer

What does the Lloyds Business Barometer measure?

The Barometer provides a monthly snapshot of how businesses are feeling about their own prospects and the wider economy. It captures the sentiment of business leaders and offers timely insights into how businesses across the UK economy are feeling about the future.

Lloyds provides banking services to nearly one million businesses across the UK, giving us a unique vantage point to understand the corporate landscape, from micro-businesses to large corporates, spanning industries and geographies. Our Barometer has been running for over 20 years and enhances our insight by offering a credible, consistent and robust data series that tracks evolving sentiment and emerging trends.

The survey is conducted independently and participants are unaware that it’s commissioned by Lloyds, helping to minimise bias. From a survey panel of 20,000 firms, a different set of 1,200 business owners, company directors and finance leaders each month complete an online questionnaire.

Panel firms are a mix of clients and those which bank elsewhere. Key topics include trading prospects, economic optimism, pricing decisions and hiring trends. For ease of completion and consistency, we ask only for simple directional responses to the questions (for example ‘increase’, ‘decrease’, ‘stay the same’) and calculate net balances for each. This analysis approach provides timely insights on turning points. The headline Business Confidence Index is a composite of the net balances for two key questions: how respondents view their trading prospects in the year ahead and their optimism about the economy compared to three months ago. 

Our sample includes businesses with turnovers above £250,000, spanning all sectors and UK regions. The headline UK indices are weighted according to sector, turnover and geography to ensure these are representative of the broader business landscape. We also include retail and public sector organisations which are often excluded from other surveys. While many other surveys focus on confidence in the wider economy or on specific risks like cost pressures, tax burdens and regulatory challenges, our Barometer offers a broader and more nuanced view.

Why the Lloyds Business Barometer matters

In periods of economic uncertainty, it may be intuitive to focus on the negatives. However, the data tells a more nuanced story. Businesses are not blind to the challenges, but they are responding to them. They are relatively optimistic not because they ignore the risks, but because they believe in their own ability to adapt and thrive. 

One key difference with the Lloyds Business Barometer compared with some other business surveys is that it canvasses leaders’ opinions and expectations, not just current conditions. This means that it offers timely insights on business sentiment or optimism, which can be more resilient or durable than prevailing economic conditions at any particular time.   

Business surveys like ours offer a timely read on the economy. Unlike official statistics, which are often published with a lag, surveys offer early signals. However, there is no single, definitive measure of business confidence. Methodologies and the wording of questions vary, and that’s why it’s important to consider a range of indicators to get a well-rounded view.