Business confidence in London fell 11 points during June to -31%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported lower confidence in their business prospects, which fell month-on-month to -29%. When taken alongside their views on the economy overall, this gives a headline confidence reading of -31%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact of coronavirus on their business, almost a third (30%) of London firms said they expect to be operating at more than 50% of capacity by the end of June, though 17% didn’t expect to be operating at all by the same point. More than a quarter (27%) said it would take six months until they were back operating at pre-COVID-19 levels, although 8% expect it to take more than 12 months.
The majority of firms continued to see demand fall during June, with the picture worsening month-on-month. Seven in 10 (69%) firms experienced a drop in demand for their products and services, compared to 56% in May. Meanwhile, 8% experienced an increase in demand, down 12 points on the month before.
Of the 82% of businesses reporting disruption to their supply chain during June, almost a third (31%) expected the situation to improve within three months, while 4% expected it would take more than 12 months to return to normal levels.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking said, “Business confidence in the capital has slipped to its lowest reading during the coronavirus pandemic, which is a blow because June’s dip follows a slight sentiment improvement during May.
“With further easing of restrictions and social distancing measures, the anticipated re-opening of the hospitality industry in July should encourage a more positive outlook among business leaders hoping it will support economic recovery.
“We remain by the side of London’s businesses so they can move forward in as strong a position as possible.”
Across the UK, business confidence grew marginally month-on-month, rising three points to -30%. The West Midlands was the least pessimistic region at -18%, followed by Yorkshire & the Humber and the North East at -23%. Scotland was the most pessimistic, with confidence dropping eight points month-on-month to -41%.
In June, the construction sector rebounded strongly, increasing 30 percentage points to -14%. The retail sector increased two points to -23% and manufacturing saw an improvement at -35%. These were the highest levels seen since March, however, other services fell to -36% largely reflecting the impact on the hospitality and education sectors.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking said, “While the results suggest the economy may be starting to see some improvement, trading conditions remain difficult for most firms as the majority are still experiencing disruption to supply chains.
“Hopefully the recent Government announcement of further relaxation of restrictions and the slight easing of social distancing measures will enable more businesses to reach their capacity and resume their usual activities, which we would expect to be reflected in further improvements to optimism next month.”