Business confidence in London fell 4 points during July to 51%, according to the latest Business Barometer from Lloyds.
Companies in London experienced a mixed month: while firms’ confidence in their own trading outlook fell 14 points to 57%, their optimism in the economy rose 6 points to 44%. This gives a headline confidence reading of 51% (vs. 55% in June 2026)
A net balance of 39% of businesses in the region expect to increase staff levels over the next year, down 12 points on last month.
Business confidence in London now sits below the 12-month average of 58%, with its highest figure of 69% in August 2025.
Looking ahead to the next six months, London businesses identified their top target areas for growth as investing in their team, for example through training (48%), introducing new technology, such as AI or automation (45%), 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.
Kirsty Sadler, Regional Director for London at Lloyds, said: “The pullback in business confidence in July reflects a more cautious market, but London’s businesses haven’t lost faith in the economy more generally.
“Trading outlook at 57% shows real resilience, and the fact that nearly half of firms are planning to invest in their teams and explore new technology suggests they’re thinking strategically about the months ahead.”
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Overall, UK business confidence rose five points in July to 49%, hitting a four-month high.
This was driven by an increase in economic optimism, reflecting the decline in global energy prices, the Bank of England holding interest rates and the announcement of an interim peace agreement in the Middle East at the time of the survey.
Optimism in the wider economy rose 11 points to 42%, compared to a 12-month average of 37%. Of those surveyed, 59% said they were optimistic (up four points from June) in the wider economy, while those who felt pessimistic decreased by seven points to 17%. The main factors cited by firms who felt more positive this month were, stronger customer demand, improving interest rates or financial conditions and better economic news.
Businesses’ own trading outlook remained unchanged at 56% in July, compared to a 12-month average of 57%. Sixty-five percent of firms (up one point from June) expect stronger output over the year ahead, while those expecting weaker activity increased one point to 9%. Among firms expecting stronger activity, the main factors were, stronger customer demand, increase investment in capacity or tech and improved supply chain conditions.
Amanda Murphy, CEO for Lloyds Business and Commercial Banking said:
“It’s encouraging to see business confidence reach its highest level in four months, driven by a significant improvement in economic optimism. While challenges remain, these results suggest many businesses are feeling more optimistic about the opportunities ahead.
“Businesses have remained remarkably resilient in recent months, with many focusing on investing in their future, improving productivity and making sure they’re well placed to respond as market conditions change. The stronger confidence we’re seeing among smaller businesses and firms focused on the domestic market is particularly encouraging, suggesting more businesses are starting to see opportunities for growth and investment.”
