Companies in London reported confidence in their own business prospects month-on-month, up eight points at 57%. When taken alongside their optimism in the economy, up 12 points to 48%, this gives a headline confidence reading of 53% (vs. 43% in April)
Looking ahead to the next six months, London businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (46%), investing in their team, for example through training (44%), introducing new technology (41%) and entering new markets (41%).
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.
Overall, UK business confidence increased 11 points in May to 50% – its highest level since August 2024.
Firms’ optimism in their own trading prospects strengthened six points to 56%, while their confidence in the wider economy also climbed 16 points to 44%.
The East Midlands was the most confident UK nation or region in May (66%), followed closely by the North East (65%).
Construction firms’ confidence rose to a nine-month high of 56%, while those in the service sector reported a one-year high of 54%. Manufacturing confidence also rose by two points to 40%. However, retail confidence fell by five points to 40%, the lowest level since January this year.
Kirsty Sadler, regional director for London at Lloyds, said: “It’s encouraging to see strong growth in business confidence across the capital this month. The renewed optimism – not only in their own trading prospects but the wider economy – reflects the ambition, adaptability and forward-looking mindset that continues to define London’s business community. We remain committed to supporting local firms as they harness this momentum to innovate, grow, and invest in their future.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “The rebound in business confidence suggests that firms might be in a stronger position for the next quarter. The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid more promising prospects for potential global trade agreements.
“Equally as encouragingly is the fact that trading prospects, wage expectations and hiring intentions also saw improvements this month. The positive trends in these metrics are important signals for potential growth and resilience in the business community and the wider economy. While we know that fluctuations do occur month on month and the global economic outlook remains uncertain, this month’s increase in confidence is an encouraging sign.”