London leads UK growth in June as business activity gains momentum

Private sector activity in London strengthened further in June, highlighting the capital’s resilience as business activity fell nationally for a second consecutive month.

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The London Business Activity Index rose to 54.1 in June, up from 53.6 in May, signalling a solid and sustained expansion in output across the capital’s private sector.

London recorded the strongest growth of any UK nation or region by a considerable margin. The South East and North East also saw activity increase. 

The capital’s performance was supported by continued growth in new business and the slowest rise in prices charged since February.

“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.”

Catherine van Weenen, NatWest’s Regional Managing Director, Commercial Mid-Market, London & South East

Performance in relation to UK

London companies reported a solid rise in new business intakes at the midpoint of 2026, extending the current sequence of growth to 11 months. Where an increase was posted, panellists largely commented on greater client spending and new customer wins. However, there were some reports of demand weakness linked to the war in the Middle East and domestic political uncertainty.

Despite easing to the slowest for three months, the capital’s uplift in new work was notable compared to the national trend, as UK private sector sales decreased at the quickest pace for almost a year. London and the North East were the only regions to register growth in June.

Local firms demonstrated lower confidence in the year-ahead activity outlook. The latest data pointed to the weakest projections since July 2025, though they remained stronger than the UK average. Positive sentiment was often related to new client wins, business investments and capacity expansions, whilst also partly reliant on a calming of economic turbulence from the Middle East conflict. 

Barring October 2025, London firms have posted falling employment for more than a year-and-a-half. June was no exception, with the rate of job shedding softening only fractionally since May and remaining sharp overall. The drop in employment was more marked than the UK average for the sixth month in a row.

According to qualitative responses, efforts to lower staffing often reflected the recent uptick in price pressures and tighter profit margins. Companies cited staff redundancies, team restructuring and the non-replacement of voluntary leavers. 

Firms in London reduced their backlogs of orders for the third month in succession in June. However, the respective seasonally adjusted index moved closer to the 50.0 neutral mark, signalling that the latest depletion was marginal. Meanwhile, outstanding business volumes across the UK fell at the sharpest rate since November 2025.

June survey data revealed that companies in the capital faced much higher input costs over the month. Increased staff expenses, higher rates for transport and insurance, and rising prices for items such as computer chips and fabrics were widely reported.

Although historically high, the rate of input cost inflation eased further from April’s multi-year peak due to a moderation in fuel prices. The increase in costs was one of the slowest seen nationally, with only the North East and the East of England recording smaller markups.

A similar pattern was seen for output prices, suggesting that London firms were broadly willing to pass on relative cost savings to customers. Prices charged by local firms increased overall, but the uplift was the weakest since February and the slowest out of the 12 areas tracked by the survey.