Business confidence in the UK has not reached these levels since April 2017. Lloyds Bank Business Barometer discovered the highest increase in confidence was found by employers in the North West and East of England.
The survey found overall business confidence for UK firms increased by six points to +36% in August.
The increase can be understood by optimism for stronger growth in the year ahead.
The survey found a seven-point increase in the proportion of firms expecting higher business activity in the year ahead to 48%.
The highest monthly increase in confidence occurred in the services sector, rising to 36%.
However, there is still concern about inflation.
Gareth Oakley, managing director for business banking at Lloyds said: "It is clear there is still some level of uncertainty on inflation and the impact of price pressures.
"The last few months of the year will be pivotal to the future of UK economic growth."
The survey is conducted each month, with the recent one taking place between 2 and August 16.
The rollout of vaccines, adjustments to self-isolation rules and the ending of lockdown restrictions have contributed to greater confidence among firms in August.
In July the International Monetary Fund’s (IMF) predicted 5.3 percent growth for the UK.
Chancellor Rishi Sunak said: "There are positive signs that our economy is rebounding faster than initially expected, with the IMF forecasting the UK to have the joint highest growth rate in 2021 among the G7 economies.”
Mr Sunak added: "We still face challenges ahead as a result of the impact of the pandemic, which is why we remain focused on protecting and creating as many jobs as possible through our Plan for Jobs.”
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Of all the G7 nations, the UK was the worst hit in 2020, with output dipping 9.8 percent.