London had the strongest business confidence of any UK nation or region for a second month in a row in December, despite confidence falling marginally month-on-month, according to the latest Business Barometer from Lloyds.
Companies in London reported lower confidence in their own business prospects month-on-month, down four points at 66%.
When taken alongside their optimism in the economy, down four points to 41%, this gives a headline confidence reading of 53% (vs. 57% in November) – the strongest recorded of any UK nation or region in December.
Looking ahead to the next six months, London businesses identified their top target areas for growth as entering new markets (54%), along with investing in their team, evolving their offering, and introducing new technology, such as AI and automation (all 42%).
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 fell two points in December to 39%, although remained above the long-term average of 29%.
While firms’ confidence in the wider economy strengthened five points to 31%, their confidence in their own trading prospects fell eight points to 47%.
The North West (50%) followed London as the second-most confident UK nation or region.
Sector Insights
Although confidence fell in the service sector, this was partly offset by rises in manufacturing and retail, with these sectors swapping places in December.
Services fell from 46% to 35% in December – a fall of 11 points. In contrast, manufacturing and retail increased 10 points to 42% and 43% respectively, thereby taking manufacturing and retail above services for the first time in 4 months. Trading prospects for retail rose for the first time in three months, while construction confidence was steady at 41%, equalling last month’s result.
Kirsty Sadler, regional director for London at Lloyds said: “The capital continues to lead the country in business confidence, despite a slight dip this month.
“Businesses will now be working to build on this optimism as they finalise and kick start their plans for the year to come. And we’ll continue to be by their side with our bespoke support to help them make the most of the opportunities that lie ahead.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “In the last few months overall confidence has fallen incrementally, and in December the trend continued as it fell by 2 points to 39%. While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs.
“The key difference in this month’s results is that the fall in confidence is driven by firms’ own trading prospects which have proven to be resilient over the last quarter. There was, however, more positivity regarding the wider economy and, going into 2025, this offers some hope if companies continue to feel confident about the economy.
“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be a significant for this time of year.”
