Business confidence in London soared to its highest level since 2018, up 17 points to 41% 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 18 points to 36%. When taken alongside their optimism in the economy, up 14 points to 44%, this gives a headline confidence reading of 41% – significantly above the UK average of 33%.
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 23% of businesses in the region expect to increase staff levels over the next year, up 16 points on last month, and the highest reading of any UK region or nation.
Overall UK business confidence remained steady month-on-month at 33%. Firms reported a small increase in their business prospects up two points to 30%, the highest reading since September 2020. Confidence in the economy dipped marginally by two points to 36%.
Across the UK, all regions and nations reported positive confidence readings for the third consecutive month. London was second only to Scotland, where confidence rose 27 points to 42%. The East of England delivered the third highest increase in overall confidence, up ten points to 36%.
While confidence remained positive, firms in eight regions reported a month-on-month drop. Yorkshire & the Humber saw the biggest drop (down 14 points to 30%), followed by the West Midlands (down 12 points to 29%), the North West (down nine points to 29%) and East Midlands (down nine points to 31%).
Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said: “Despite a challenging year, London’s businesses have remained resilient and their efforts are now paying dividends with confidence at its highest level for almost three years.
“Firms have worked hard to make a success of reopening and even though restrictions have now been extended, we can see that there is still a drive to create jobs, which will play a significant role in the UK’s recovery from the pandemic. We are committed to supporting London’s SMEs as they capitalise on new opportunities for growth in the months ahead.”
The majority of responses were given before the various UK governments formally announced the delay to the removal of all limits on social contact, which was originally expected to happen on 21st June in England and close to that date in other parts of the UK. However, it is likely that anticipation of the delay may have had a small negative impact in confidence particularly in the retail sector (down eight points to 36%) while manufacturing also fell (down 18 points to 35%). Despite this, confidence remains at historically high levels across the broad industry sectors – in part due to services increasing by five points (31%) to its highest level in more than three years and construction remaining steady at 35%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “A fifth consecutive monthly increase in trading prospects and employment expectations highlights the resilience of UK businesses as they continue to recover from the challenges presented by the pandemic. Although we must now wait slightly longer for the last remaining COVID-19 restrictions to ease, it’s an encouraging sign that firms continue to have strong overall confidence in the outlook for the UK economy, as well as their expectations for their own growth prospects.”