Business confidence in London rose nine points during April to 47% – the highest reading in the UK – according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up five points at 54%. When taken alongside their optimism in the economy, up 13 points to 41%, this gives a headline confidence reading of 47%.
London businesses identified their top target areas for growth in the next six months as evolving their offer (37%), investing in sustainability (36%) and investing in their team (33%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 39% of businesses in the region expect to increase staff levels over the next year, up 14 points on last month and higher than all other regions and nations in the UK.
Overall, UK business confidence climbed one point to 33% in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month. After London, the East Midlands (up 18 points) and North East (up three points), both at 41% reported the next-highest levels of confidence.
Firms’ outlook on their own trading prospects remained strong at 39% for the second consecutive month, and a net balance of 27% of businesses are intending to increase their staff levels, up two points on March.
Ahead of the three Bank Holidays in May, firms’ optimism in the overall economy increased five points to 28% – the highest reading since June last year.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “London firms are on something of a hot streak, with the capital returning to its position as the most confident region in the UK.
“What’s even more encouraging is that London firms are seeing investment in sustainability as a real growth driver. It’s crucial that firms are proactive about progressing their journey to net zero, and this is another example of the capital setting the tone that other businesses need to follow.
“Improving carbon emissions is becoming easier for firms to do, particularly when you consider the range of green-focused tools available, like our Clean Growth Financing Initiative. We’re committed to remaining by firms’ side to make these investments and become more sustainable.”
Business confidence in the service sector rose to 36% this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43% while manufacturing and retail remain above last year’s lowest levels.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.
“The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.
“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”