Business confidence in London drops but remains in the black

Business confidence in London fell 14 points during December to 8 per cent the lowest reading in the city for more than twelve months according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the capital reported lower confidence in their own business prospects month-on-month, down 21 points at 16 per cent. When taken alongside their optimism in the economy, down six points to 1 per cent, this gives a headline confidence reading of 8 per cent.

London businesses identified their top target areas for growth in the next six months as diversifying into new markets (36 per cent), evolving their offer (30 per cent) and investing in sustainability (30 per cent). The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of 8% of businesses in the region expect to increase staff levels over the next year, down eight points on last month.

Overall UK business confidence rose seven points during December to 17 per cent. The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8 per cent, while their outlook on their own future trading prospects increased by two points to 27 per cent.

Businesses also remained optimistic about job creation, with 16 per cent of firms planning to hire more staff in the next 12 months up two points on November.

All UK regions and nations reported a positive confidence reading in December, for the first time since July, with eight out of 11 recording a month-on-month increase in confidence. Of those, the North West (up 31 points to 40 per cent), North East (up 24 points to 34 per cent) and South East (up 23 points to 14 per cent) saw the largest monthly increases, with the North West now the most optimistic overall.

Becci Wicks, regional director for London at Lloyds Bank Commercial Banking, said: “Confidence among the capital’s firms has taken a hit, but it remains in the black as we wrap up what’s otherwise been a stellar 2022 for firms who’ve battled relentless headwinds.

The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13 per cent. Confidence in construction and services also increased by nine points to 29 per cent and 18 per cent respectively. However, retail confidence fell slightly, by two points to 13 per cent.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While firms report being hopeful for a more successful 2023, inflation and the risk of an economic downturn remain the biggest concerns for businesses, with rising costs evidenced by the number of firms expecting to raise prices.”

By Mark Adair – Correspondent, Bdaily