London business confidence soared in March as the UK’s ongoing economic recovery lifted spirits in the capital, according to a closely watched survey.
Business confidence in London rose 14 points to 52 per cent in March, according to Lloyds’ Business Barometer. This was driven by a 23 point increase in firms’ optimism in the economy as a whole.
“The capital’s confidence is booming,” Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said.
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“Businesses are clearly seeing brighter horizons when it comes to the economy – an outlook that could have been buoyed further by last week’s UK inflation data showing price rises slowing to a two-and-a-half year low,” he continued.
In the country as a whole, business confidence remained at 42 per cent in March, matching the highest level recorded last year. Yorkshire and the North East recorded even higher levels of confidence than London, while the Midlands recorded a sharp fall.
One factor driving the improvement in business confidence in the first few months of 2024 was reduced concern about supply chain disruption.
Hann-Ju Ho, senior economist at Lloyds, said the figures bring a “positive end to the first quarter of the year”.
Higher levels of corporate confidence reflect the improving economic outlook for the UK. Inflation is falling faster than expected while growth returned in January, suggesting last year’s shallow recession is already over.
Markets expect the Bank of England to start cutting interest rates in June, with three rate cuts expected over the remainder of the year. This would help ease the pressure on struggling households and encourage business investment.
A number of forecasters have upgraded their estimates for UK growth over the coming years in a sign that things are looking up for the economy. S&P joined the chorus, with new projections released yesterday suggesting the UK has “turned a corner”.
Although the firm expects the UK to grow just 0.3 per cent this year, it is then expected to rise to 1.4 per cent in 2025 and 1.7 per cent in 2026.
“UK consumers’ purchasing power is gradually improving amid a resilient labour market, paving the way for a recovery of consumption,” the report said.