FX.co ★ UK Business Optimism Remains Weak

In January, business sentiment in the UK worsened, with manufacturers expressing reduced optimism about both the business landscape (-19%) and export prospects (-12%). However, this sentiment is currently the least negative since July 2024. Confidence is being eroded by declining output and a significant drop in new orders, as customers delay decisions and curtail spending, resulting in lean order books. This lack of demand visibility is the primary factor undermining confidence and is hampering investment plans. Although the pace of cost growth has decelerated, high wages, energy costs, and taxes continue to compress profit margins. With both capacity utilisation and employment still in decline, confidence remains muted, underscoring the necessity for lower business costs and clearer policy to support recovery.