Business confidence has risen sharply in the past month now that uncertainty over the effects of the last Budget and the General Election have ended, a new survey showed today.
A poll of 200 firms by Lloyds TSB Financial Markets revealed that the service sector was the most optimistic.
Two thirds of all the companies that were questioned said they expected output to increase in the next year, a rise of four per cent over a previous survey in April.
Trevor Williams, chief economist at Lloyds TSB Financial Markets, said: "After a poor first quarter, a recovery in business confidence may well now be under way as we go through the second quarter.
"Oil prices have eased back by almost ten cents a barrel from their peak in April. This will act to lower oil-related input costs and free up some income at the same time as companies' ability to pass on these costs appears to have strengthened.
"What's more, there is an increasing view among consumers that interest rates have peaked at 4.75 per cent."
Of those interviewed, manufacturing firms were the least optimistic about future prospects.