Business confidence in London rose nine points during September to -4%, making it one of the most confident regions in the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

September was the first time that London firms felt optimistic about the economy for the first time since March. Economic optimism increased 15 points month-on-month to 2%. Firms’ confidence in their own business prospects also improved month-on-month, although remained in negative territory at -8%. Together, this gives a headline confidence reading of -4%, the joint highest alongside Wales and the East Midlands.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during September, but with the picture improving month-on-month. 64% experienced a fall in demand for their products and services, down two points on the month before. Meanwhile, 19% experienced an increase in demand, up eight points on August.

The September data suggests many businesses expect to make redundancies following the end of the furlough scheme next month. When asked about job retention among firms with furloughed staff, only 19% expect to bring back more than 90% of their employees.

More than a quarter (28%) of London firms surveyed said they aren’t currently using the Job Retention Scheme.

When asked about the impact of social distancing measures, 59% of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although 24% said they couldn’t operate fully within the rules.

Of the 60% of businesses reporting disruption to their supply chain during September, more than half (48%) expect the situation to improve within six months, while 7% expect it will take more than 12 months to return to normal levels.