London business confidence rose by 12 points in May

Business confidence in London rose 12 points during May to 55%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in London reported higher confidence in their own business prospects month-on-month, up nine points at 54%.

When taken alongside their optimism in the economy, up 15 points to 56%, this gives a headline confidence reading of 55% (vs. 43% in April).

Firms in the capital identified their top target areas for growth in the next six months as investing in sustainability (41%), introducing new technology (40%) and investing in their team, for example through training (37%).

A net balance of 50% of businesses in the city also expect to increase staff levels over the next year, up 10 points on last month.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. The data for this edition was collected between 1–16^th May, before the UK general election was announced.

National picture

In May, overall UK business confidence reached its highest level since 2015 – rising by eight points to a net balance of 50%.

Businesses showed increased optimism in both their trading prospects (up nine points month-on-month to 54%) and the economy (up seven points to 46%). Firms’ trading outlook was the most optimistic in seven years, while economic optimism was the highest recorded since September 2021.

Scotland and the South East of England were the most optimistic of the UK nations or regions in May (both 57%), followed by the West Midlands (56%).

Sector insights

Similarly, there were particularly strong results reported in the construction and services sectors this month. Prospects in the construction sector jumped to 58% (up 20 points), the highest for 14 months, while in services, expected output increased to 57% (up 12 points). On the latter, it is the highest level since the survey was expanded in 2018. Expected business activity in the retail sector also improved to 49% (up three points).

Although trading prospects in manufacturing eased slightly to 49% (down three points), the underlying trend over the last three months remains positive.

Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said, “May hasn’t just brought the first real tastes of summer to the capital – it’s ushered in a rise in confidence too.

“It’s particularly encouraging to see most London’s businesses have plans to hire. This could bring wider benefits to the city’s communities and the local economy, as well as supporting firms with their growth plans.

“Looking ahead, looming events like Wimbledon and the arrival of Taylor Swift’s Eras tour will see the city busier than ever, presenting new opportunities for growth – particularly for the hospitality sector. We’ll continue to be by business’ side, whatever this opportunity looks like.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, added, “These results highlight a notable improvement in business confidence.

“Optimism about the economy increased to 46% this month – the highest result since September 2021, when the country was emerging from the Covid-19 pandemic, but before the energy crisis after the invasion of Ukraine.

“The regional picture has also improved – we’ve now seen increases in seven of the UK’s 12 regions, where there was previously a more mixed picture. Results in the South East, Scotland and the West Midlands were particularly strong. Across the sectors, there were strong, broad-based improvements in services and construction.”