Business confidence in London rose nine points during November to 56%, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1 to 15 November, before the Chancellor’s Autumn Statement announcement on Wednesday 22nd November.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up four points at 60%. When taken alongside their optimism in the economy, up 15 points to 53%, this gives a headline confidence reading of 56% – the highest level out of all UK regions and nations.
London’s businesses identified their top target areas for growth in the next six months as evolving their offer (37%), diversifying into new markets (37%) and investing in their team (35%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 46% of businesses in the region expect to increase staff levels over the next year, up 11 points on last month.
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Overall UK business confidence rose three points in November from 39% to 42%, the third consecutive monthly increase, while firms’ outlook on the overall UK economy increased four points to 38%. Businesses’ optimism in their own trading prospects also continued the upward trend for the second consecutive month, rising three points to 48%.
Companies’ hiring intentions reached their highest level since May 2022, with 35% of firms intending to increase staff levels over the next 12 months, up three points month-on-month.
London was the most confident region in the UK, followed by the North West (54%), Yorkshire and the Humber (50%) and the North East (48%). Companies in the North West reported the biggest uptick in business confidence, increasing 20 points month-on-month to 54%.
Firms in the services industry reported an increase in confidence to 46% (up three points), the highest level for over two years (since September 2021), reflecting broad-based optimism in the sector.
Retail confidence also rose for a second month to 42% (up five points), while sentiment among manufacturing firms reached a five-month high of 45% (up nine points) in contrast with recent shortfalls. Construction firms’ confidence improved for the first time in three months to 35% (up four points), but this still lags other sectors.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said, “Walk through Covent Garden or down Oxford Street and it’s little wonder why London’s businesses are the most confident in the UK once again.
“The seasonal trading period is traditionally a busy time for the capital’s pubs, bars, restaurants and retailers, as increasing numbers of visitors and locals enjoy the festive period.
“Naturally, this creates demand for more staff, and recruiting will be easier for firms with available working capital so they can afford to bring new people onto the books. We’ll be by their side to support them with flexing operations to meet increased demand and make the most of the Christmas period.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, added, “Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.
“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.
“Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”
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