London business confidence picked up slightly in May as the government lifted coronavirus restrictions, but firms grew gloomier across the country as a whole.
The business barometer from Lloyds showed that London business confidence rose eight points on its gauge to minus 20. This was nonetheless close to a record low after sentiment plunged in April.
Worryingly for policymakers, business confidence in the country as a whole continued to fall in May. The countrywide Lloyds gauge hit minus 33 in April, the lowest score since the depths of the financial crisis in 2008.
The government has already lifted some aspects of the coronavirus lockdown, with more to come in June and July.
Outdoor markets, car showrooms and dentists can reopen from Monday if they can follow safety guidelines, Prime Minister Boris Johnson said yesterday.
Non-essential retailers such as clothes shops will be allowed to open from 15 June if the coronavirus infection rate stays under control, the PM said.
Pubs, restaurants and cinemas are expected to be the last to reopen. The government’s roadmap suggests they could welcome customers again in July.
Nonetheless, the Lloyds barometer showed that companies across the country remain deeply worried about the economic situation.
Optimism about the future among firms fell in May despite the plans to reopen. It hit its lowest level since 2009.
Hiring intentions also fell again. Almost 40 per cent of firms said they did not expect to raise wages over the next year.
London businesses increase capacity
Yet confidence was above the national average in London, West Midlands and North of England.
In the capital, firms said they were more confident about the prospects of their own businesses in May than in April.
Meanwhile, the number of firms in London operating at less than 50 per cent capacity decreased 15 percentage points to 37 per cent.
“While it will clearly be some time before we return to something resembling normality, we must take encouragement from London firms increasing their operational capacity,” said Paul Evans, regional director for London at Lloyds Bank.
Hann-Ju Ho, senior economist at Lloyds, said: “Despite the results partly capturing the period since the Government’s announcement of an initial easing of restrictions, trading conditions remain difficult for most firms.
“Nevertheless, a further relaxation of constraints will enable more businesses to resume their activities.”