London was the most confident part of the UK for a third month in a row in January, according to the latest Business Barometer from Lloyds.
While London firms’ confidence in their own business prospects held steady month-on-month (66%), their optimism in the economy rose four points to 45%.
Taken together, this gives a headline confidence reading of 55% – up two points from December 2024 (53%) and the highest recorded of any UK nation or region in January.
A net balance of 49% of businesses in the region also expect to increase staff levels over the next year, up eight points on last month.
Looking ahead to the next six months, London businesses identified their top target areas for growth as evolving their offering (54%), for example by introducing new products or services, investing in their team, for example through training (51%), and entering new markets (44%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall, UK business confidence fell two points in January to 37%.
While firms’ optimism in their own trading prospects strengthened four points to 51%, their confidence in the wider economy dropped seven points to 24%.
For the third month in a row, London was the most confident UK nation or region in January (55%), with the West Midlands following behind (51%).
Sector Insights
There were similar falls in manufacturing, construction and retail this month, with a slight increase in services. Confidence fell to 38% in manufacturing (down 4 points), 36% in construction (down 5 points), and 40% in retail (down 3 points). However, confidence in services increased by 3 points to 38%. These results come within a general trend of larger confidence declines in retail and services in recent months. Within the services sector, confidence has notably fallen in hospitality but has remained more stable in business services and health-related services.
Kirsty Sadler, regional director for London at Lloyds, said: “London businesses are kicking-off 2025 with stronger confidence and hiring intentions – good foundations for their growth and that of the capital’s economy.
“As firms get underway with this year’s plans, we remain committed to providing the tailored support they need to achieve their ambitions, whether that’s introducing new products, launching new services, upskilling their team or expanding into new markets.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Changes in confidence can sometimes be sudden and sharp, but what we have seen recently has been a more gradual and measured decrease over time.
“The figures for trading prospects show promise with businesses signalling more resilience and assurance in their ability to weather perceived economic headwinds. The regional picture is similarly a cause for optimism, with seven regions reporting higher confidence, meaning it is the first time since July there has been more confidence rises than falls regionally.
“Elsewhere, the results for hiring prospects are in line with other trends from this month’s survey – dipping slightly by one point to 32%. Price expectations have fallen too, for the third month out of four.”
Leave a Comment