Business confidence in London fell 40 points during April to -28%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported lower confidence in their business prospects month-on-month at -25%hen taken alongside their views of the economy overall, this gives a headline confidence reading of -28%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
In an illustration of the impact of COVID-19 on the region’s business, the majority of firms reported a significant decrease in demand for their goods and services, with 78% seeing demand fall in April compared to 12% who saw it rise.
More than half (52%) of businesses in London reported operating at below 50% capacity, while 33% reported operating above this level. One in 10 (9%) businesses was not operating at all.
Of the 72% of businesses that reported disruption to their supply chain during April, 24% expected the situation to improve within six months, while 8% expected it would take more than 12 months to return to normal.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking said, “The huge decline in London firms’ confidence after an encouraging start to the year is sadly not surprising, given the impact that the pandemic is having on London businesses.
“The vast majority of firms are facing a significant fall in demand alongside disruption to their supply chains, creating challenging trading conditions.
“We will continue to support local businesses during this difficult period, and this includes setting aside £2bn of arrangement fee-free finance for those directly affected by COVID-19.”
Across the UK, overall confidence fell 38 points to -32% as firms’ optimism in the economy and confidence in their own prospects dropped sharply. Wales reported the lowest confidence at -52%.
In April, overall business confidence fell across all four sectors. Confidence in the manufacturing sector saw the sharpest decline, falling 46 percentage points to -35%, with the retail sector falling to -33%. The construction sector fell by 34 percentage points to -20%, while services fell 23 points to -22%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking said, “The results in April demonstrate the full impact of the measures taken by the Government to shut down large parts of the economy to help contain the pandemic, with sentiment now matching the all-time low of December 2008.
“There are tentative signs that China’s economy is stabilising as it starts to ease lockdown measures, and that may serve as a template for the rest of the world.”