Business confidence in London remained the highest of all UK regions and nations for the third month in a row, despite falling two points during November to 63%, 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 four points at 63%. When taken alongside their optimism in the economy, down eight points to 63%, this gives a headline confidence reading of 63%.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 41% of businesses in the region expect to increase staff levels over the next year, down 21 points on last month.
Overall, UK business confidence was buoyant in November at 40%, down just three points on October’s reading of 43%. Both firms’ confidence in their own trading prospects and optimism in the economy remained comfortably in positive territory, each dipping just three points month-on-month to 39% and 41% respectively.
All UK nations and regions had positive confidence readings in November, with three regions – Wales, the East of England and South East – reporting an increase on October’s data. Firms in London (down two points to 63%) remained the most confident for the third month in a row, followed by the North East (down 16 points to 45%), the West Midlands (down eight points to 42%) and East Midlands (down 13 points to 42%). A net balance of 30% of firms across the UK reported plans to create new jobs in the next 12 months, with hiring intentions strongest in London (41%), Wales (37%) and the South West (37%).
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “It’s encouraging to see London businesses remain bullish and optimistic about the months ahead as we approach the end of another challenging year for companies everywhere.
“From the bright lights of Oxford Circus to Christmas markets from Hyde Park to Greenwich, the capital’s retail and hospitality firms in particular will be hoping for a festive flourish to help them enter 2022 in as strong a position as possible.”
At a sector level, confidence slipped in manufacturing (42%), to its lowest since August, linked to the persistence of supply-chain disruptions, while it fell to a seven-month low of 28% in construction.
In contrast, the retail sector (45%) bucked the trend with a pickup in confidence, reflecting hopes for higher spending ahead as the festive period approaches. Services confidence (41%) fell slightly, with strong growth for financial & business services and communications offset by more downbeat responses from education, health and public administration.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence remains robust above the long-term average, but it dipped this month as economic optimism and trading prospects were affected by the persistence of rising costs and supply chain issues.
“Pay expectations remain elevated with a quarter of businesses anticipating rises of 3% or more in the next 12 months which will add to business costs, but it bodes well for staff facing into economic challenges.”