Business confidence in London rose five points during March to 12%, the highest levels since March 2020, according to the latest Business Barometer from Lloyds Bank Commercial Banking. The data has been released just a week after the one-year anniversary of the first COVID-19 lockdown.

Companies reported higher confidence in their own business prospects month-on-month, up 10 points at 14%. When taken alongside their optimism in the economy, up one point to 11%, this gives a headline confidence reading of 12%.

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

When it comes to jobs, a net balance of 9% of firms in London expect to increase staff levels over the next year, up 12 points on last month when 3% of firms had expected to reduce headcount over the next year.

The national picture

Overall UK business confidence rose for a second consecutive month in March. Firms’ confidence increased by 13 points to 15%, the highest reading since February 2020, before coronavirus was confirmed as a pandemic by the World Health Organisation.

UK firms’ economic optimism also increased by 15 points to 17%, while confidence in their own business prospects jumped 10 points to 12%.

In fact, every UK region and nation reported an increase in overall confidence during March, with most reporting a double-digit rise month-on-month. The North East (1% to 26%), West Midlands (3% to 27%) and East of England (-8% to 12%) reported the largest increases. Scotland was the only area to remain in net negative territory despite an increase in confidence, giving a reading of -2%.

Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said: “After a year of restrictions, the pace of the vaccine rollout and imminent easing of lockdown is evidently having a positive impact on the outlook of London businesses. The city’s world-renowned hospitality sector, in particular, will be looking forward to reopening its doors next month.

“Job creation is back on the agenda for many firms, and this is another sign of a more confident business community, although naturally some uncertainty remains. Whatever lies ahead, we’ll be by the side of businesses across the capital to help them emerge from the pandemic in as strong a position as possible.”

In the sectors, manufacturing and retail recorded the highest confidence levels, both at 25%, while services and construction rose to 11% and 12% respectively.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It’s been a year since the first lockdown and the surge in confidence this month tells us firms are increasingly confident about economic recovery.

“The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures. It will be interesting to see whether the momentum for stronger business optimism is sustained in the months ahead.”