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Capital 500: London Quarterly Economic Survey Results, Q1 2025

Tuesday 9 April 2025

Summary

Our Q1 2025 Quarterly Economic Survey reveals nuanced economic landscape for London business. On the one hand, internal company prospects remain positive, with decision-makers expressing cautions confidence despoite a moderation from high levels seen earlier in the year. The net balance for individual business outlook remains steady at a modestly positive level, indicating that while firms still expect growth, their optimism is now more tempered compared to the buoyant highs of Q3 2024.

What we found

  • Domestic Demand: Key metrics have continued to decline over the last three months. While there was a slight improvement in domestic orders, with the proportion of firms reporting an increase rising from 21% in Q4 to 24% in Q1.

  • Export Demand: The proportion of London businesses reporting an increase in export orders rose by +4 percentage points, climbing from 22% in Q4 to 26% in Q1.

  • Labour Market: Approximately two-thirds (69%) of companies experienced no change in workforce size over the period, a trend that mirrors the stability observed in the previous quarter.

  • Recruitment and training: As with workforce growth, the proportion of London businesses that attempted recruitment  in the past three months declined with only 25% of  firms engaging in recruitment activities in QI - a 5 percentage point drop from Q4's 30% and a return to levels below Q3 (26%).

  • Business Costs: Labour costs continue to be the primary driver behind price increases for London businesses, with 45% affirms in QI citing them as a source of pressure, down slightly from 47% in Q4.

  • Cashflow and Investment: Investment plans for London businesses have remained steady compared to the previous quarter for both training and plant and equipment. A quarter (25%) of firms reported an increase in training investment - consistent with Q4 (24%), Q3 (20%) and Q2 (22%). 

  • Business Confidence: The proportion of London businesses anticipating improvements in their economic prospects remains steady at 37% in Q1, compared to 36% in Q4.

  • Economic Outlook: Decision-makers are showing mixed sentiments regarding London's economic outlook. While 28% now expect an improvement over the next twelve months - a slight decline from 31% in Q4 - the proportion anticipating a weakening in London's prospects has increased from 31% in Q4 to 35% in Q1.

About this report

For over a decade, the London Chamber of Commerce and Industry (LCCI) has conducted a Quarterly Economic Survey (QES) of its members to gauge business performance and general confidence levels across the capital. This is part of the biggest and longest-running national private business survey, conducted by regional chambers of commerce across the UK every quarter. Savanta surveyed a total of 506 London business leaders between 23 January and 20 February this year. All data was weighted to be representative of all London businesses by company size and broad industry sector.

Download the report