Confidence among companies has "surged" in recent weeks despite the increase in interest rates, according to a new report today.
A survey of 200 firms by Lloyds TSB showed that more than half were optimistic about the economy, compared with just one in three at the end of last year.
Almost two out of three said they expected the level of business activity to increase this year, the highest figure since last September.
Trevor Williams, chief economist at Lloyds TSB Capital Markets, said: "Thankfully the December blip in confidence was short-lived. The continued recovery in manufacturing, strong retail sales growth and robust earnings and employment conditions have knitted together to provide a bedrock of optimism for UK firms' 2007 expectations.
"Strong growth in the global economy and in the UK's main markets in Europe is boosting companies' orders and sales, even though the pound is firm."