Business confidence in London rose 14 points during March to 52%, according to the latest Business Barometer from Lloyds Bank Commercial Banking, driven by a stronger economic outlook.
Companies in London reported higher confidence in their own business prospects month-on-month, up six points at 57%. When taken alongside their optimism in the economy, up 23 points to 47%, this gives a headline confidence reading of 52% (vs. 38% in February).
London businesses identified their top target areas for growth in the next six months as introducing new technology, such as AI or automation (43%), evolving their offering, for example by introducing new products or services (43%), and entering new markets, for example by diversifying into adjacent markets or exporting to new ones (41%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).
Yorkshire and the Humber was the most confident UK nation or region in March (60%), followed by the North East (56%). London’s was the third strongest confidence reading in March.
Services confidence fell 5 points to 40%, the first decline since December. That drop, however, was offset by rises in confidence in the manufacturing, retail and construction sectors.
The gains in manufacturing (up 1 point to 41%) and construction (up 2 points to 40%) were relatively modest and confidence remained below levels seen at the start of 2024. Firms in the retail sector reported improved confidence (up 5 points to 45%), which was the strongest result for over two years.
Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said, “The capital’s confidence is booming. Businesses are clearly seeing brighter horizons when it comes to the economy – an outlook that could have been buoyed further by last week’s UK inflation data showing price rises slowing to a two-and-a-half year low.
“They’ll now be reviewing their operations to see how they can capitalise on opportunities ahead. Whether it’s through funding or strategic support, we’ll continue to be by their side to help them make the most of whatever the coming months bring.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said, “With businesses reporting 42% confidence in March, this month’s figures maintain the recent improvement bringing a positive end to the first quarter of the year. Firms are showing increasing resilience which is reflected in their easing concern about supply chain disruption and energy prices.
“Businesses also continue to signal optimistic hiring intentions, although slightly down on previous months. It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms.
“Among the regions there was a mixed picture. Following unusually low confidence in February, London bounced back with a 14-point increase to bring the capital back in line with typical figures reported for the area, although the greatest confidence was shown by businesses in Yorkshire & the Humber who reported a 29-point rise, making it the most confident region overall.
“However, businesses in the Midlands saw a significant fall which seems to be an outlier compared to recent results.
“Overall, the Barometer across the quarter suggests that we could begin to see more optimistic economic growth in 2024 than seen in recent years, although medium-term challenges remain.”
