The 20th half-yearly survey reveals a marked turnaround since the pessimistic mood prevalent at the beginning of 2002.
None of those asked in December expected to increase their order books, whereas, in contrast, this survey showed that 29 per cent consider it more likely.
The proportion of firms reporting they were able to raise prices rather than lower them has edged up slightly to five per cent in the last six months, up from minus three in the last six months of 2001.
However, only a fifth believe further price rises are sustainable.
However, investment is up on December's data with 29 per cent increasing expenditure to date (up from 26 per cent), with 26 per cent of firms predicting this will continue in the second half of the year.
The balance of companies expecting to increase expenditure has improved significantly from minus eight to nine per cent. This is in line with recent evidence that suggests that manufacturing profitability is beginning to recover.
Michael Riding, managing director of Lloyds TSB Corporate, says: "British business is in surprisingly good shape following the grave difficulties of the last 12 months and is producing performance levels that do not reflect the rock bottom confidence reported in the December survey.
"Inflationary pressure remains low. Companies are finding it easier to hire staff and spare capacity has risen in tune with investment. Green shoots of recovery in the form of positive expectations for sales and exports over the coming second half suggest that GDP may have risen in the second quarter and the worst may be over for the time being. This, combined with low unemployment, low interest rates and weak inflation suggests that the UK may be on target to return to an average GDP growth of three per cent in 2003".
