Business confidence in London fell two points during July to 62%, according to the latest Business Barometer from Lloyds.
While companies in London reported higher confidence in their own business prospects month-on-month, up three points to 73%, their optimism in the economy dropped nine points to 50%.
Taken together, this gives a headline confidence reading of 62% (vs. 64% in June).
A net balance of 68% of businesses in the city also expect to increase staff levels over the next year, up 23 points on last month.
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 (55%), evolving their offering, such as introducing new products or services (42%), entering new markets (37%) and introducing new technology, such as AI and automation (37%).
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.
Overall, UK business confidence increased one point in July to 52% – its highest level since 2015 and the third consecutive monthly increase.
Firms’ optimism in their own trading prospects rose one point to 58%, while their confidence in the wider economy increased two points to 47%
Wales was the most confident UK nation or region for the second month in a row (76%), followed by the North East (73%).
July saw the service sector’s confidence increase by 11 points to 61%, one of the main drivers behind this month’s overall increase in business confidence, indicating strong momentum in the sector. This gain was partially offset by declines in other areas, with retail firms down eight points, manufacturers down four points and the construction sector down six points.
Kirsty Sadler, regional director for London, said, “It’s incredibly encouraging to see such strong confidence from the capital’s businesses in their own business prospects and to see so many firms planning to hire in the year ahead – something that doesn’t just benefit the businesses themselves, but also their local community.
“As London firms look ahead to further growth with their characteristic ambition, we’ll be ready to support their next steps.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said, “This continued upward trend reflects a growing sense of cautious optimism across the UK economy, underpinned by both improved trading prospects and broader economic sentiment.
“Despite ongoing cost pressures, firms are positioning for growth, particularly in services where hiring and investment plans are accelerating.
“Overall business confidence remains buoyant, with firms well placed to take advantage of opportunities such as new markets, adopting new technology and workforce expansion amid evolving market conditions.”
