Business confidence in London rose 29 points during January to 37%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported higher confidence in their own business prospects month-on-month, up 25 points at 41%. When taken alongside their optimism in the economy, up 32 points to 33%, this gives a headline confidence reading of 37%.
London businesses identified their top target areas for growth in the next six months as diversifying into new markets (35%), evolving their product and service offering (33%), investing in their team (28%) and introducing new tech (28%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 21% of businesses in the region expect to increase staff levels over the next year, up 13 points on last month.
Overall UK business confidence climbed in January, with firms reporting their highest confidence levels since July last year.
Business confidence increased by five points to 22% and the net balance of businesses feeling optimistic about the economy doubled on December’s reading to 16%.
Ahead of National Apprenticeship Week (6-12th February) 30% of businesses across the UK reported that they are looking at opportunities to grow by investing in staff development and training. A net balance of 17% of firms reported plans to create new jobs in the next twelve months.
Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “London’s firms really are looking to hit the ground running in 2023, with the capital recording the biggest rise in confidence of all regions and nations in January. In particular, the rise in confidence in the economy suggests businesses see a landscape in which they can drive investment and deliver on their growth plans.
“These growth ambitions go hand in hand with businesses expanding their headcount and developing the expertise of their teams. We’ll be by the side of businesses as they help to build the talent they need to thrive.”
For the second month in a row, confidence in the manufacturing and service sectors increased, with manufacturing rising to 28% (up 15 points) and services up to 25% (up seven points). Business confidence in construction was down two points to 27%, while retail confidence fell for the second month in a row to 7% (from 13%), the lowest level since February 2021.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing.
“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.”
