Business confidence in London rose five points during November to -19%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Optimism towards the economy grew by 12 points month-on-month to -19%. Meanwhile, Companies in the capital reported lower confidence in their own business prospects down two points month-on-month at -18%. Together, this gives a headline confidence reading of -19%.
When it comes to businesses’ hiring intentions, a net balance of 23% expect to reduce staff levels over the next year, up three points on last month.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Vaccine news boosts national confidence
At UK level, the report tracked a dramatic increase in business confidence after the 9 November announcement that the Pfizer and BioNTech vaccine has 90% efficacy against COVID-19.
Firms surveyed after the announcement between 9 and 16 November had an overall confidence of -15%, which was seven points higher than those polled before, between the 2 and 8 November (-22%).
For the month as a whole, UK business confidence registered at -21%, down three points on October.
Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said: “It’s encouraging to see a slight rise in business confidence among the capital’s firms, especially against the backdrop of national lockdown measures, which have dampened optimism about trading prospects during November.
“The city region’s hospitality and retail industries are now gearing up to welcome customers back at what would usually be one of their busiest times of the year and we hope this will buoy confidence levels next month. Meanwhile, encouraging vaccine developments continue to add hope that trading prospects will increase for London businesses next year.”
UK regional and sector overview
The North East had the highest confidence in November at -8%, followed by Yorkshire & the Humber (-11%) and Wales (-15%). Meanwhile, optimism fell 10 points in Scotland to -38% making it the least confident of the UK’s nations and regions.
In the industry sectors, confidence declined in manufacturing, construction and retail as stricter lockdown measures were imposed across the UK. Manufacturing confidence fell by 10 points to 25%, driven by a sharp fall in optimism about the economy and a smaller decline in trading prospects (chart 3). Construction confidence dropped by 13 points to 23%, while retail confidence fell by five points to 12%. Services confidence, meanwhile, increased slightly by three points to 21%, having already fallen significantly in October.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking added, “The sustained number of coronavirus cases and more restrictive lockdown measures saw overall business confidence fall again this month. Firms across the sectors also continue to remain cautious as they prepare for a new trading relationship with the EU. However, confidence increased following the news of a potential vaccine to help combat the virus. The months ahead will be key for businesses as they navigate the winter months and adapt to the evolving landscape.”