Business confidence in London rose four points during February to 7%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Although companies reported lower confidence in their own business prospects month-on-month, down five points to 4%, optimism in the economy was up 12 points to 10%, giving an overall confidence reading of 7%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When it comes to jobs, a net balance of 3% of businesses in the region expect to reduce staff levels over the next year, up one point on last month.
Across the UK, overall business confidence rose in February as the government announced it would be creating a ‘roadmap’ out of lockdown. Confidence increased by nine points to 2%, the first net positive reading since March 2020. Firms’ economic optimism also jumped 12 points month-on-month to 2%.
All UK nations and regions saw a month-on-month increase in confidence in February, with the biggest increases in the North West (13% vs -5% in January), the East Midlands (10% vs -8% in January), Wales (-5% vs -20% in January) and Scotland (-17% vs -32% in January). Despite this, four remained in net negative territory with Wales (-5%), the South West (-6%), the East of England (-8%), and Scotland (-17%) all in the red.
Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said, “Despite the significant challenges presented by ongoing lockdown restrictions, especially for London’s world-famous tourism and hospitality sectors, it’s encouraging to see confidence creeping up for the second month in a row. This could in part be driven by sectors, such as financial services, having been able to continue operating despite the restrictions.
“Whatever the industry, we remain by the side of firms across the capital and will support them through the Covid-19 disruption and beyond.”
Confidence increased across all four broad industry sectors to the highest levels since March 2020. After a soft start to the year, manufacturing jumped by fourteen points to 5%, while construction rose eight points to 7%. Confidence in retail extended nine points to 3%, while services advanced by ten points to 1%, led by broad-based improvements in the subsectors.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking added, “The uplift in business confidence and its entry into positive territory after nearly a year suggests that firms are cautiously pinning their hopes on economic revival in the future and the continued success of the vaccine rollout. In the coming weeks, announcements in the Budget and prospects of an easing of lockdown restrictions will hopefully help to bolster the recovery in business confidence as the economy starts to reopen.”