London led UK in business confidence in February, according to the latest Business Barometer from Lloyds.
Companies in the capital reported lower confidence in their own business prospects month-on-month, down 10 points at 71%. When taken alongside their optimism in the economy, down eight points to 47%, this gives a headline confidence reading of 59% (vs. 68% in January).
Despite the dip, this was the highest confidence level recorded of any UK nation or region in February, ahead of the North West (58%) and Northern Ireland (58%).
Looking ahead to the next six months, London businesses identified their top target areas for growth as introducing new technology, such as AI or automation (54%), investing in sustainability (45%), and evolving their offering, for example by launching new products or services (40%).
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.
National picture
Overall, UK business confidence was unchanged since January at 44%.
Firms’ confidence in their own trading prospects fell six points to 53%, but their optimism in the wider economy rose eight points to 36%.
Sector Insights
The construction sector saw strong gains in overall confidence. In February, confidence was up 14 points to 60%, with manufacturing also seeing a boost, up five points to 37%. Confidence for retail and service sector firms softened slightly, each down two and three points respectively.
Kirsty Sadler, regional director for London at Lloyds, said: “Despite this month’s dip, firms across the capital remain focused on growth and are turning to areas like technology and product innovation to help expand their businesses. Whatever their plans, we’ll be ready with our support to help them take their next steps.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “It’s encouraging to see optimism in the wider economy returning, although with a small reduction in firms’ confidence in their own trading prospects. The majority of the survey results were collected following the Bank of England’s close decision to hold interest rates at its February meeting, signalling potential easing ahead, which may have alleviated business concerns, including those around cost pressures. While the rise in pricing expectations to a six month high may indicate firms are looking to rebuild their margins in 2026.
“It’s also great to see confidence increase for manufacturers and construction firms as they are key for UK growth.”
