Business confidence in London rose 12 points during September to 33%, the highest of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th September, before the Chancellor’s economic announcement.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up seven points at 46%. When taken alongside their optimism in the economy, up 17 points to 20%, this gives a headline confidence reading of 33%.
London’s businesses identified their top target areas for growth in the next six months as investing in their teams (46%), introducing new technologies (33%) and evolving their offering (32%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of more than a quarter (27% of London businesses expect to increase staff levels over the next year, up three points on last month.
Overall UK business confidence stayed the same as in August during September at 16%. Despite the net balance of businesses planning to create new jobs increasing by one point to 17%, firms’ outlook on their future trading prospects dropped one point to 25%, and their optimism in the wider economy also fell by one point to 5%.
Three UK regions and nations recorded a month-on-month increase in optimism in September. Along with London, the South East (up 15 points to 15%) and Scotland (up 10 points to 15%) both reported higher confidence readings. Only Wales (down five points to -4%) recorded a negative overall confidence reading in the last month.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: ”The significant rise in confidence this month is a cautious signal that firms are delivering business as usual as best as they can in the face of numerous economic headwinds.
“While hiring and staff retention remains a challenge for businesses far and wide, it’s encouraging that the capital’s firms still plan to recruit and invest in their people. When it comes to making the most of wider growth opportunities, keeping a keen eye on working capital will be key, and we’ll remain by their side to provide the support they need to realise their potential.”
Business confidence rose by two points in both the retail and service sectors (15% and 17% respectively), however both these figures are close to 12-month lows. Manufacturing and construction firms saw their lowest levels of business confidence this year, down two points in manufacturing to 14% and down 16 points to 10% in construction. This was driven by overall falling optimism in the economy.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “It is encouraging to see business confidence stabilising after a three-month decline. Firms’ assessment of their own trading prospects also remained steady and continues to show some resilience during turbulent times. Yet, cost pressures remain, as more businesses look to raise prices to help protect their margins while wage pressures show little sign of abating at this stage. With the recent volatility in financial markets as well as the Government’s Growth Plan and energy cap announcements, it will be interesting to see how these measures affect business confidence.”
