London Businesses Cautiously Optimistic Despite Budget Woes

Source: Visit website

London businesses remain cautiously optimistic about their profitability and turnover prospects in 2025, despite mounting cost pressures and concerns over recent Budget policies, according to the Capital 500 , London's quarterly economic survey conducted by the London Chamber of Commerce and Industry (LCCI).

However, optimism varied by business size. Profitability expectations among micro firms (0–9 employees) increased from +25 in Q3 to +31 in Q4, while larger firms (10+ employees) reported a more cautious outlook, with expectations falling from +59 to +52 in the same period.

Despite this cautious optimism, economic confidence has decreased markedly. The net balance for confidence in overall company prospects fell from +29 in Q3 to +15 in Q4, marking the lowest figure recorded since 2023. While businesses remain optimistic about their own prospects, confidence in the overall UK economy for 2025 has plummeted. Predictions for economic health took a sharp 23-point drop in Q4 to -4, reflecting growing concerns about measures announced in the Autumn Budget and the Employment Rights Bill. Only 31% of businesses now believe the UK economy will improve over the next 12 months, a stark reminder of the uncertainty that businesses face heading into the new year.

"To drive long-term growth, the Government must address business concerns around rising employer costs, reduced business rates relief, and the Employment Rights Bill. Stability, certainty, and supportive policies are crucial for London's businesses to invest, innovate, and contribute to the UK's prosperity."