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Growing economic optimism drives rise in London business confidence

Business confidence in the capital rose two points during April to 19%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Although companies in London report slightly lower confidence in their business prospects, which fell one point to 28%, their economic optimism rose eight points to 10%. Together, this gives an overall confidence of 19%.

Meanwhile, a net balance of 25% of businesses in the region now expect to hire more staff during the next year, up eight points on last month.

Across the region, a net balance of 20% of businesses said they feel that the UK’s exit from the European Union is having a negative impact on their expectations for business activity, up five points on a month ago.

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

Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said: “It’s positive to see rising optimism about the economy boosting overall confidence for the second month in a row.

“Businesses in the capital have demonstrated their resilience time and time again, and their growing hiring intentions suggest many firms are taking steps to ensure that they’re prepared to capitalise on future opportunities.

“Whatever their goals, we’ll be at the side of businesses every step of the way. That’s why we’ve pledged to lend £2.6bn to firms in the capital this year alone, helping them to focus on their growth ambitions.”  

Across the UK, overall confidence climbed four points to 14% in April as both firms’ optimism about the economy and their confidence in their own prospects continued to rebound from earlier in the year. 

Companies’ economic optimism rose to 4%, while confidence in their own business prospects climbed three points to 23%.

London is the third most confident region in the UK, behind businesses in the West Midlands, at 28 %, and the North West (20%).

Those in Wales are the least confident, with an overall confidence of minus 1%, 15 points below the national average.

Across the UK, the overall confidence of firms in manufacturing, construction and services all improved – but retail sector confidence fell.

Manufacturing and construction confidence rose for the first time in three months, increasing six points to 16% and two points to 15% respectively. Services confidence increased by five points to 12%.

Meanwhile, the retail sector – which posted the highest confidence in March – fell this month by six points, placing it on a par with the manufacturing sector at 16%.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “While business confidence remains low when viewed against the historic average, it is certainly encouraging to see an increase in overall optimism for the second month in a row.

“Firms appear more positive about both their own trading prospects and the broader economy, although their assessment of the potential impact of the UK leaving the EU remains unchanged. We will have to wait and see whether this partial rise converts into a sustained recovery.”

Ashleigh Smith
Article by Ashleigh Smith
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