Business confidence in London fell 20 points during October to -24%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in London reported lower confidence in their own business prospects month-on-month at -16%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -24%.
When it comes to businesses’ hiring intentions, a net balance of 20% expect to reduce staff levels over the next year, up 10 points on last month.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Across the UK, overall confidence dropped seven points month-on-month to -18%. While confidence about businesses’ own trading prospects dipped by only one point, their optimism in the economy fell by 14 points. UK business confidence has remained in negative territory since April, but the picture had been improving until October, with confidence steadily rising since May.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking said, “After four months of incremental growth in optimism, this month’s figures represent a stark drop in confidence. Undoubtedly, the mood has shifted with Covid-19 cases and lockdown restrictions rising once again. The tailing off of some business support schemes are presenting further challenges for firms.
“We’re standing by the side of businesses in the capital as they seek to overcome the hurdles before them this winter.”
The North West had the highest confidence in October at -2%, followed by the East of England (-8%), and North East (-10%). Meanwhile, optimism fell 21 points in Yorkshire to -29%, making it the least confident UK region.
In the industry sectors, services slipped back, with confidence declining by fourteen points to -24%. The decline was driven by hospitality and arts and leisure grappling with the implications of recently introduced measures to tackle the pandemic. Manufacturing and retail logged modest improvements, up three points to -15% and up one point to -7% respectively.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking said added, “The resurgence in coronavirus cases and the reintroduction of local lockdown measures saw overall business confidence fall back sharply this month. Added to that are ongoing uncertainties regarding new trading arrangements with the EU in January. All of this makes the economic outlook uncertain and the period ahead will be pivotal for businesses as they navigate the winter months and continue to adapt to the evolving landscape.”