London businesses increasingly confident they can power UK economy out of recession

London businesses are increasingly confident they can power the UK out of any recession it gets itself into, a closely watched survey published today reveals.

Optimism among the capital’s firms rose at the fastest pace out of any region in the UK this month, jumping 29 points to 37 per cent, according to research by Lloyds Bank.

The new figures reinforce findings from other organisations that suggest London companies are more buoyant compared to the rest of the UK about the coming year.

London is outperforming the nationwide economy, indicating the capital is on course to avoid what experts think may be a long recession in the UK, a business index from bank Natwest earlier this month showed.

Numbers published recently by the London Chambers of Commerce and Industry revealed the capital’s jobs market is booming.

Britain is on course to tumble into a recession this year largely driven by households reducing spending in response to inflation eroding their pay, although it may not be as bad as first feared.

Just in November, the Bank of England thought the country would suffer the longest recession in a century, but rapidly falling energy prices means the central bank is certain to raise its GDP forecasts alongside Thursday’s interest rate decision.

UK-wide business confidence is also on an upward march. Lloyds said it increased five points to 22 per cent this month, propelled by improving optimism in the economy.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing.”

A rosier outlook on the trajectory of the economy has boosted firms’ intentions to take on more staff, with Lloyds’s hiring index also inching higher to a positive net balance of 17 per cent. Expectations on how much companies will have to hike pay to retain staff also cooled.