London firms show resilience despite fall in confidence

Business confidence in London fell 15 points during September to 46%, according to the latest Business Barometer from Lloyds
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Companies in London reported an unchanged level of confidence in their own trading outlook month-on-month, remaining at 60%. When taken alongside their economic optimism, down 32 points to 31%, this gives a headline confidence reading of 46% (vs. 61% in August 2026).

Despite lower economic optimism, London firms showed resilience, with 60% maintaining a positive trading outlook. A net balance of 34% of businesses in the region expect to increase staff levels over the next year, down nine points on last month.

Business confidence in London now sits below the 12-month average of 57%, with its highest figure this year of 68% in January. 
Looking ahead to the next six months, London businesses identified their top target areas for growth as entering new markets (50%), investing in their team through training (47%), and evolving their offering through new products or services (43%).

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.

Kirsty Sadler, Regional Director for London at Lloyds, said: “Despite a fall in overall confidence levels, it’s encouraging that London is still outperforming the UK average. And maintaining healthy confidence in trading outlook, despite broader economic challenges, suggests businesses in the city are focused on what they can control.

“We are seeing clarity around priorities, with half of London firms actively targeting new markets, and others investing in their teams and developing new offerings. That’s the mindset of businesses planning to grow, and it’s something we’re continuing to support.”

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Overall, UK business confidence fell 12 points to 41% in September, the lowest level since April 2025.

This decline follows August’s reading of 53%, the second highest recorded this year, and buoyant results since May. While confidence remained well above the survey’s long term average of 30%, it was six points below the 12-month average of 47%.

The overall 12-point decline, which was comparable to the fall recorded earlier this year following the start of the Middle East conflict, was driven by a fall in economic optimism, as businesses responded to higher energy prices as a result of renewed tensions in the Middle East.

Businesses’ own trading outlook declined eight points to 50%, compared to a 12-month average of 56%. The majority of businesses (57% down nine points from August) expect an increase in output over the year ahead, while those expecting a decrease in activity reduced by one point to 7%. Among firms expecting weaker activity, the main drivers were economic uncertainty, higher cost pressures and weaker customer demand.

Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “While confidence among larger firms remains strong, smaller businesses have seen a fall in sentiment as they continue to navigate higher costs, inflationary pressures and global uncertainty. Overall confidence remains above its long-term average, and most businesses still expect activity to grow over the coming year, underlining the resilience of UK firms. Ensuring smaller firms can share in future growth will be crucial in the months ahead.”