London suffering from UK economic malaise, NatWest data suggests
Businesses in London saw output decline for the second consecutive month in NatWest’s growth tracker – yet there is some optimism that the capital’s economy could resurge.
Firms widely reported Chancellor Reeves’ tax hikes and a rise in energy bills, which kicked into effect in what has been dubbed ‘Awful April’, contributed to a decline in production in the month.
New research has now suggested that firms in the UK’s most productive region have not shrugged off costs brought by the government’s policies, with the hangover effects still impacting firms and stifling growth in London.
NatWest has suggested that falling demand for goods and services in the capital kept the London business activity index under the 50-figure benchmark which signals output has not increased or declined month-on-month.
Its London Growth Tracker, which takes data from S&P Global’s purchasing managers’ index (PMI) surveys, also showed that job numbers fell in the private sector at a softer pace than in April.
But researchers at the Big Four bank said firms were looking ahead to the months ahead in a more positive mood given financial markets calmed after President Trump rowed back on many of his tariff announcements.
London manufacturers struggling
Sectors in London’s economy which suffered the most included textiles and clothing, electrical and electronic equipment and chemicals.
NatWest chief economist Sebastian Burnside said there was some cause for spirits to be lifted despite new figures suggesting London was not outpacing other regions across the UK.
“Demand weakness was widespread across the UK in May, with Wales being the only region to see an upturn in new orders,” he said.
“It’s encouraging to see growth expectations bounce back, indicating that some of the worries attached to the global economic backdrop have cooled.
“Businesses in the capital highlighted long-term investments and plans to integrate new technologies as central to their growth strategies.”
A separate report conducted by the consultancy BDO suggested that UK output had was in positive territory, with companies finding business partners in Asia and Europe to sell goods and other products to.
Researchers said business confidence improved in May due to suggestions Britons are braced for a hot summer, which could boost spending across high street shops in London and other shopping hubs across the UK.
But stark figures suggested that employment was at a near-decade low.