Business confidence in London rose 21 points during September to 62%, the highest of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up 16 points at 59%. When taken alongside their optimism in the economy, up 27 points to 66%, this gives a headline confidence reading of 62%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was conducted before fuel disruption and ongoing supply chain issues tightened their grip.
A net balance of 64% of businesses in the region expect to increase staff levels over the next year, up 36 points on last month and the highest reading in the UK.
Overall UK business confidence rose 10 points in September to 46%, with all regions and nations reporting double-digit confidence levels. The number of businesses planning on hiring new staff more than doubled from 18% to 37% as firms plan to increase headcount over the next 12 months. Overall confidence in trading prospects rose by nine points to 43% and firms’ optimism in the economy increased by the same amount to 48%.
All bar three UK regions reported an increase in confidence with Wales (up 27 points to 46%) and Yorkshire and Humber (up 22 points to 48%) reporting the biggest jumps. Firms in the North West (down 17 points to 47%) and East of England (down nine points to 30%) reported falls in confidence but both remained comfortably in positive territory. Businesses in the South East reported no change month on month at 32%.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “The increase in business confidence in early September reflects the city beginning to return to something resembling normality, with firms across the capital eager to plan ahead and, in many cases, make up for lost time.
“There are of course still challenges ahead, and the recently-publicised limited labour availability and events in the fuel market might impact businesses’ outlook in the coming weeks. Whatever the industry, we will remain by the side of London firms to help them address any challenges and capitalise on the opportunities that come their way.”
Confidence increased across the four broad sectors, notably in manufacturing and services. Manufacturing (up nine points to 49%) reached a four-month high, while services gained 11 points to 47%, the highest since early 2017, with particularly strong trading prospects in hospitality and financial & business services. Retail confidence improved by 8 points to a four-month high of 42%, while construction only edged up by 1 point to 41% which was nevertheless a three-year high.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “It remains encouraging to see a further improvement in business confidence reaching its highest level since April 2017.
“Employment expectations have risen significantly, with more than half of businesses expecting to recruit in the next 12 months. The hope is that the availability of labour will increase to alleviate current staff shortages for many firms, which will help to underpin UK economic growth over the medium term.”