Capital 500: London Quarterly Economic Survey Results, Q1 2025
Tuesday 9 April 2025
Summary
Our Q1 2025 Quarterly Economic Survey reveals a 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.
The Q1 2025 survey was based on the following methodology:
- 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.
