Business confidence in London rose five points during August to 60% – its highest level since January – according to the latest Business Barometer from Lloyds Bank Commercial Banking.
While companies in London reported lower confidence in their own business prospects month-on-month, down two points to 70%, this was the strongest of any UK nation or region in August. When taken together with their optimism in the economy, which rose 12 points to 50%, this gives a headline confidence reading of 60% (vs. 55% in July) – the highest recorded in the capital since January 2024.
Looking ahead to the next six months, London businesses identified their top target areas for growth as entering new markets (53%), investing in their team, for example through training (50%) and evolving their offering, for example by introducing new products and services (39%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall UK business confidence in August remained unchanged from July at 50%.
Firms’ confidence in the overall economy increased two points to 47%, offsetting marginally weaker confidence in their own trading prospects, which fell two points month-on-month to 54% but remained above the long-term average.
The North East was the most confident UK nation or region in August (65%), followed closely by Scotland (64%).
Sector Insights
Output expectations for the various sectors remained at or near their three-year highs. Construction had a steep increase to 58%, up by 14 points, whereas other sectors experienced slight declines. Trading prospects for manufacturing dropped by 2 points to 58%, at the same level as construction, while Retail and Services fell to 53% down 7 and 3 points respectively.
Kirsty Sadler, regional director for London at Lloyds Bank Commercial Banking, said: “London companies are leading the country when it comes to their own trading outlook – a testament to the city’s vibrant, innovative and resilient business community. Firms are now looking to further growth, whether through investment in their team or entering new markets, and we’ll continue to be by their side to help them capitalise on any and all new opportunities.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “As in July we’ve seen a particularly strong outcome for business confidence. It remains at an elevated level of 50%, which is well above the long-term average of 29% – and it has been above the average for the past 15 months. Official GDP data for the first half of this year was encouraging and the survey results indicate that solid economic performance will likely continue as we move into the second half of the year.
“On a more cautious note, we have seen wage growth expectations pick up this month, although not enough to negate the downward trend so far in 2024.
“Overall, the economy looks to be stable and from the positive results recorded, businesses are echoing this sentiment.”
