By Daniel Hunter

UK firms are growing in confidence, buoyed by a more positive outlook for Europe and are hopeful of a boost to business activity during the first half of 2013 according to the latest Business in Britain report from Lloyds TSB Commercial.

The twice yearly report, now in its 21st year, canvasses the views of 1800 UK businesses and shows that optimism is at its strongest level since the economy came out of the initial recession in 2009, driven in particular by stronger profit expectations but also by a better outlook for sales and orders.

The survey’s key Business Confidence Index tracks businesses’ views of likely sales, orders and profits for the coming six months and presents the overall “balance” of opinion weighing up the percentage of firms that are positive in outlook against those that are negative.

The index has increased to 19 per cent, from 12 per cent in the previous survey, due largely to a rise in expected sales and orders over the next six months. However, while confidence continues to rise, employment and investment intentions for the next six months have only moderately increased, suggesting that companies remain cautious about future hiring prospects and capital projects.

“It is good to see that businesses have managed to work through the tough economic headwinds of the last couple of years and have a rather more positive outlook for 2013," David Oldfield, Managing Director, Small to Medium Sized Enterprise (SME) and Mid Markets Banking, Lloyds Banking Group said.

"Businesses are clearly feeling more optimistic about Europe and, after a poor 2012, we should see more demand and orders coming through from the continent over the coming months. However, many firms are still cautious and are not investing in increasing their headcount or on key capital projects.

"Although this is understandable given uncertainty, many more could consider investing now. It will be improvements in competitiveness and market development that will ensure that the UK economic recovery is sustainable and long lasting. Investing now could pay dividends for companies’ profit margins in the future.”

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