LCCI survey finds majority of businesses facing higher energy bills and mounting inflationary pressures
London businesses are under growing cost pressure, with 61% reporting higher energy bills in the last quarter, according to new data from the London Chamber of Commerce and Industry’s quarterly economic survey. As a result, 44% of firms plan to increase prices over the next three months, raising concerns about how long they can continue absorbing costs without passing them on to customers.
The findings come as business leaders look to the forthcoming Budget for support. Many firms are calling for targeted tax relief and investment incentives, but confidence in government backing remains low. Concerns over further tax increases have intensified following recent signals of fiscal restraint from ministers at the Labour Party Conference.
Business confidence remains subdued. Just 48% of London companies expect profitability to improve in the next 12 months, with sentiment weakest among small and medium-sized enterprises. The share of firms anticipating a fall in turnover rose to 18% in Q3, up from 16% in the previous quarter, reflecting continued strain on smaller businesses and service providers.
Recruitment expectations showed a mixed picture. While 31% of firms intend to increase headcount, only 3% plan reductions. Inner London businesses reported greater staffing pressures than those in outer boroughs.
Despite the cost pressures, demand has shown early signs of recovery. Domestic orders increased slightly to 26% of firms, while export orders rose to 12%. Confidence in the UK economy edged higher, with 31% expecting improvement over the next year, compared with 29% in Q2.
Inflation remains a significant concern, with 55% of businesses more worried about inflationary pressures than in the previous quarter.
Liz Giles, Policy and Communications Director at the London Chamber of Commerce and Industry, said: “We are entering the final months of 2025 with a mixed picture of the business environment and London economy. On the one hand, we are seeing fewer businesses reducing headcount, stabilised export activity and greater levels of optimism about the economy as a whole. Yet, on the other, businesses are nervous ahead of the Chancellor’s upcoming Budget, in what many of our members are anticipating to be another blow to their bottom line.
“Recent announcements, such as the commitment to revitalise high streets across the UK, are a positive step. But to rebuild confidence and support growth, the government must demonstrate that it is listening and responding to the concerns of London’s business community.”
The survey found that energy costs remain the single largest expense increase, with 61% of firms reporting a rise, down slightly from 66% in Q2. Utilities, labour and finance costs continue to be major drivers of price pressures, though all eased compared with earlier in the year.
Cashflow and profitability indicators showed modest improvement. The cashflow net balance rose to +4 in Q3, up from +2 in Q2, while profitability remained steady at +31. Recruitment activity fell slightly to 31%, down from 34% in Q2.
The London Quarterly Economic Survey is part of the UK’s largest independent business survey, coordinated nationally by the British Chambers of Commerce. It is based on responses from 505 London business leaders collected between 9 July and 4 August 2025.
