Confidence among London businesses reaches highest level for almost three years

Confidence among businesses in London has reached its highest level for almost three years, according to new research published today.

Lloyds Bank Commercial Banking’s latest Business Barometer shows business confidence in the capital rose 17 points to 41 per cent in June 2021 – the highest level since September 2018.

London ranked second behind Scotland, which reported a 27 point increase to 42 per cent.

Read more: Consumer confidence resilient in June despite freedom day delay

Mark Amis, regional director for London at Lloyds Bank Commercial Banking, says: “Despite a challenging year, London’s businesses have remained resilient and their efforts are now paying dividends.”

“Firms have worked hard to make a success of reopening and even though restrictions have now been extended, we can see that there is still a drive to create jobs, which will play a significant role in the UK’s recovery from the pandemic.”

The research shows London’s labour market is recovering from the damage inflicted on it by the pandemic.

A balance of 23 per cent of businesses in the capital intend to increase staff levels over the next year, up 16 points on last month, and the highest reading of any UK region or nation.

Business confidence across the UK was stable over the month at 33 per cent in June, the same level as May.

Firms are more positive about their future performance, notching a small increase in their business prospects to reach 30 per cent, the highest reading since September 2020.

But, confidence in the economy edged down two points to 36 per cent, possibly caused by expectations that the lifting of the final coronavirus restrictions would be delayed.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Expectations of delay to freedom day dents business confidence

Although responses were given before the announcement that the ending to all restrictions would be pushed back to 19 July, it is likely that expectations of a delay may have had a negative impact in confidence in different sectors of the economy, Lloyds Bank Commercial Banking noted.

Anticipation of a delay most acutely impacted the retail and manufacturing sectors, which fell eight points to 36 per cent and 18 points to 35 per cent respectively.

However, confidence is historically high across the broad industry sectors, in part due to services increasing by five points to 31 per cent, its highest level in more than three years, and construction remaining steady at 35 per cent.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, says: “A fifth consecutive monthly increase in trading prospects and employment expectations highlights the resilience of UK businesses as they continue to recover from the challenges presented by the pandemic.”

“Although we must now wait slightly longer for the last remaining COVID-19 restrictions to ease, it’s an encouraging sign that firms continue to have strong overall confidence in the outlook for the UK economy, as well as their expectations for their own growth prospects.”

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