Businesses in London are more confident than at any point since the EU Referendum vote two years ago, according to the latest Business in Britain report from Lloyds Bank.
Confidence in the capital – calculated as an average of respondents’ expected sales, orders and profits over the next six months – is now the highest in the UK, after rising by six points to 31%.
As a result, the net balance of firms looking to grow investment in the next six months rose by six points to 22%, compared with January.
The net balance of businesses planning to hire more staff has risen nine points to 13% in the past six months, although the number reporting difficulties hiring skilled labour also increased by 10 points to 65%.
Potentially as a result of these recruitment challenges, the number of businesses expecting to increase pay rose by 10 points to 30%.
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Outside London, business confidence was highest in the South East (30%), while the lowest level of confidence was in the East Midlands (14%) and the North West (19%).
Mark Burton, regional managing director for London and the South at Lloyds Bank Commercial Banking, said: “Businesses across London are feeling increasingly confident and a growing number of firms are planning to invest and take on more staff as a result.
“This proves that firms are growing adept at operating in an often uncertain political and economic environment, which is encouraging.
“England’s better-than-expected performance at the World Cup will also boost the nation’s feel-good factor.
“But challenges undeniably remain, with finding the right talent a challenge for almost two-thirds of firms and weaker UK demand an ongoing concern for many.”
Weaker domestic demand is seen as the single greatest risk to firms in London in the next six months, cited by one in four firms (25%) in the capital, up from 18% in January.
The proportion of London firms reporting Brexit uncertainty as their greatest risk stands at 21%, while 9% cited increasing regulation.
Uncertainty around Brexit negotiations continue
Almost two fifths (38%) of firms in London expect a negative impact on their business if no trade agreement is reached with the EU.
Just under a third (32%) however expect a positive impact, while 30% either do not expect any impact or said they didn’t know.
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