In January 2025, London businesses experienced a notable increase in activity, with the London Business Activity Index rising to 54.8, the highest in seven months. This improvement was largely due to resilient demand conditions, despite ongoing job cuts within firms aiming for higher productivity and cost savings. London emerged as the fastest-growing UK region, overtaking the North East, while most areas saw declines in output. However, rising economic risks and inflation posed challenges, prompting optimism towards potential easing of monetary policy from the Bank of England.
London firms saw another solid increase in new work inflows during January. The uplift in activity also came despite job shedding, as firms were able to boost productivity amid cost saving efforts.
The pace of business activity growth jumped to a seven-month high and was the strongest seen out of the 12 monitored UK regions and nations (overtaking the North East).
Although demand momentum was the strongest seen nationally, firms indicated that rising economic risks were starting to dampen sales. Inflation is another concern.
The Bank of England's interest rate cut last week means that policy is now less restrictive, with further loosening expected in the year ahead.
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