Business confidence in London saw the sharpest decline in the country last month, falling 31 points to just five per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking. Companies’ expectations of future business activity has dipped by 29 per cent since last month, when a balance of 43 per cent anticipated an increase.
When combined with their views on the economy overall, this gives an overall confidence figure of five per cent.
Despite this, a net balance of 14 per cent of businesses in the capital still expect to hire more staff during the next year, though this measure is down 10 points on last month.
At national level, overall confidence fell 15 points to just four per cent as both firms’ optimism about the economy and their confidence in their own prospects slumped.
Across the UK, firms’ confidence in their own trading prospects fell 14 points to 13 per cent while economic confidence fell by 15 points to minus five per cent.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said: “The combination of ongoing uncertainty at home and slowing growth in key international markets has hit London business sentiment this month.
“However, we shouldn’t forget that the capital was the most confident region in the UK in January and that London firms have proven their resilience time and time again in the past. For that reason alone, we expect confidence to recover in the coming months and, as part of our continued commitment to helping the country prosper, we’ve pledged to lend £2.6bn to both new and existing British businesses this year.”
Businesses in the North West showed the most confidence, at 12 per cent, ahead of the West Midlands (11 per cent) and the North East (seven per cent).
Those in Wales were the least confident, with an overall confidence of minus two per cent, six points below the national average.
A net balance of 14 per cent of London businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, compared to a month ago when they were evenly split.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking said, “Political uncertainty has clearly affected business confidence across the UK, but the underlying economy remains resilient and is able to absorb short-term volatility.
“The modest rise in optimism at the start of the year was no more than a blip as uncertainty continues to impact on business confidence. The results suggest that near-term economic growth prospects have moderated further, but there is potential for a recovery further out should uncertainties subside.”