London businesses are increasingly confident that the capital can outperform the wider UK economy, with firms pointing to access to finance, innovation and infrastructure as key drivers of future growth.
The latest Lloyds Business Barometer shows 85 per cent of London businesses expect the capital’s economy to grow over the next three years, while 62 per cent believe London will outperform the wider UK economy over the next 12 months.
That is the highest proportion recorded across any UK nation or region, highlighting the relatively strong outlook among businesses in the capital despite continued uncertainty across the wider economy.
London firms have also maintained comparatively resilient levels of confidence in their own trading prospects, with businesses identifying investment and the capital’s concentration of talent, infrastructure and innovation as important foundations for further expansion.
Kirsty Sadler, Regional Director for London at Lloyds, said: “London businesses appear upbeat about the capital’s longer-term outlook, and what is particularly striking is the strength of that belief relative to the rest of the country.
“We’ve also seen London maintain comparatively resilient levels of business confidence during the first half of this year. That doesn’t mean firms are immune from the pressures affecting businesses nationally, but it does suggest there is a strong underlying belief in London’s ability to keep creating opportunities.
“There are good reasons for that. London has a concentration of capital, talent, infrastructure and innovation that are broadly unmatched, and businesses recognise that those strengths can help them continue to grow even when the wider environment is challenging.”
Access to finance appears to be an important factor in turning that confidence into actual investment.
Among London businesses confident about future growth, 43 per cent identify access to finance and investment capital as a leading driver. A further 38 per cent point to investment in universities, business incubators and innovation, while 36 per cent cite transport infrastructure.
The findings suggest that businesses see the capital’s growth prospects as closely linked to the availability of investment and the wider ecosystem supporting innovation and expansion.
There are already examples of organisations deploying capital to build capacity across London.
In Deptford, arts charity Acme secured a £5.5mn funding package from Lloyds to purchase the Propeller Factory, which it had rented for more than 30 years.
The acquisition gives Acme greater long-term certainty over its largest site and provides scope for further investment in the affordable workspace it offers to artists across London.
Elsewhere, DNA Vetcare is investing in a new specialist referral centre in south London, with Lloyds providing property and growth funding to support the expansion.
Sadler said: “These are very different organisations, but they illustrate the same principle. London does not lack ideas or opportunities; what matters is giving businesses and organisations the ability and confidence to act on them.”
The findings point to a potentially important distinction between business confidence and the broader economic outlook. While companies continue to face pressures affecting firms across the UK, London’s concentration of financial capital, skilled workers, research institutions and transport infrastructure gives businesses a range of potential sources of growth.
For companies, the challenge will be converting that confidence into investment and expansion.
The latest figures suggest many are prepared to do so, with finance, innovation and infrastructure emerging as priorities for businesses seeking to build for the next phase of growth.
If that investment translates into increased capacity, hiring and productivity, London’s current confidence could provide a further boost to the capital’s economic performance over the coming year.
Leave a Comment