LONDON DEFIES UK BUSINESS DECLINE WITH STRONGEST PRIVATE SECTOR GROWTH
LONDON OUTPERFORMS EVERY UK REGION AS BUSINESS ACTIVITY ACCELERATES IN JUNE
London’s private sector delivered the strongest business growth of any UK region in June, bucking the national trend as rising client demand, easing cost pressures and continued new business helped the capital strengthen its economic position despite ongoing geopolitical and domestic challenges.
London’s private sector strengthened its position as the UK’s best-performing regional economy in June, according to the latest NatWest Regional Growth Tracker, as business activity continued to expand while output across the UK declined for a second consecutive month.
The capital recorded a Business Activity Index of 54.1, up from 53.6 in May, signalling a solid expansion in private sector output and comfortably outperforming every other UK nation and region surveyed.
Only London, the South East and the North East recorded business activity growth during June, with London leading by a considerable margin.
New Business Continues To Drive Growth
A key factor behind London’s performance was continued growth in new business.
Companies across the capital reported rising client spending and successful customer acquisition, extending London’s current run of expanding new work to 11 consecutive months.
The increase stood in stark contrast to the wider UK economy, where private sector sales declined at their fastest pace for almost a year.
However, some businesses reported that international uncertainty, including the conflict in the Middle East and domestic political concerns, continued to weigh on customer demand.
Catherine van Weenen, Regional Managing Director, Commercial Mid-Market, London & South East at NatWest, said:
“London businesses showed impressive resilience in June, with activity and new work continuing to grow despite a challenging backdrop nationally.
“With cost pressures easing and demand holding up, there are encouraging signs that firms are feeling more confident about investing for the future. While hiring remains cautious, the overall outlook for London’s business community remains positive.”
Inflation Pressures Continue To Ease
Businesses across London continued to face elevated operating costs, particularly from higher wages, insurance, transport and raw material prices, including computer chips and fabrics.
However, inflationary pressures moderated compared with earlier in the year as fuel prices eased.
London recorded one of the slowest rates of input cost inflation nationally, with only the North East and East of England reporting smaller increases.
Companies also exercised restraint when passing higher costs on to customers.
Output price inflation slowed to its weakest level since February, making London the region with the slowest increase in prices charged anywhere in the UK.
Labour Market Remains Under Pressure
Despite stronger business activity, employment remained a weaker area of London’s economy.
Businesses reduced staffing levels for another month, extending a trend that has persisted for more than 18 months.
Many companies cited restructuring programmes, redundancies and decisions not to replace departing employees as they sought to protect margins against higher operating costs.
The pace of job losses remained sharper than the UK average for the sixth consecutive month.
Meanwhile, outstanding workloads continued to decline modestly, suggesting firms retained sufficient capacity to meet current demand.
Confidence Remains Positive Despite Uncertainty
Although business confidence softened to its lowest level since July 2025, London’s outlook remained stronger than the national average.
Many firms expect future growth to be supported by new client wins, investment programmes and capacity expansion, although confidence remains partly dependent on greater geopolitical stability and easing economic uncertainty.
The latest figures reinforce London’s position as the UK’s most resilient business region, demonstrating that while national growth remains fragile, the capital continues to attract investment, generate new business and outperform much of the country.
