London’s Economy: Latest News, Updated June 2026

Welcome to your monthly round-up of the latest news affecting small businesses in London. Each month, we analyse key developments across London’s economy to bring you the stories that matter most to you and your business.

Reviewed and updated by: Neil Nichols, Founder of Accounts and Legal

This monthly update is reviewed and maintained by Neil Nichols, Founder of Accounts and Legal. Neil began his career as a consultant at the Boston Consulting Group before progressing to an associate role on Bain Capital’s European Deal Team. During this time, he developed a deep understanding of business operations and the influence of wider economic conditions on commercial performance.

Following these formative experiences, Neil co-founded Portico with his brother, growing it into a leading business before its successful sale in 2021. Now, with a passion for supporting small business owners, Neil draws on his experience to help entrepreneurs stay informed on the latest economic and business trends shaping the UK landscape each month.

London SMEs get a £12m AI support package

One of the biggest London business announcements this month came during London Tech Week, when the Mayor of London announced a new £12m support package to help small and medium-sized businesses adopt artificial intelligence.

The programme is expected to invest £4m a year over three years, with the aim of giving businesses more practical support around AI adoption, productivity and growth.

This matters because AI is no longer just a topic for large technology companies. More small businesses are starting to use AI tools for admin, customer service, marketing, bookkeeping, data analysis, recruitment and internal processes.

However, many SMEs are still unsure where to start. The challenge is not simply buying a tool or signing up to a platform. The real challenge is identifying where AI can save time, reduce errors or improve decision-making without adding unnecessary cost or risk.

What does it mean for you?

For London business owners, this is a useful prompt to review where your team is losing time.

AI may be useful if your business is regularly dealing with:

• repetitive admin
• manual reporting
• customer enquiries
• stock or sales analysis
• marketing content
• invoice processing
• bookkeeping workflows
• recruitment screening
• internal document management

That said, AI should not be adopted just because it is fashionable. Before investing, ask what problem you are trying to solve, what return you expect, and who in the business will be responsible for using it properly.

The best starting point is often a small internal process where the cost of getting it wrong is low, but the time saving could be meaningful.

Access to finance is back in focus for London businesses

Access to finance has also been a major theme for London SMEs this month.

London’s small businesses now have access to the Grow London Local Money hub, a service designed to make it easier for firms to understand their finance options. The hub aims to help business owners navigate loans, grants, investment and other types of funding support.

This arrives at an important time. The Bank of England has held Bank Rate at 3.75%, meaning borrowing remains more expensive than it was for much of the last decade. Inflation has eased compared with recent peaks, but costs are still moving and energy-related uncertainty remains a risk.

For many businesses, the issue is not whether funding exists. It is whether the business is ready to apply for it.

Lenders and investors will usually want to see clear accounts, up-to-date management information, realistic forecasts and a credible explanation of how the money will be used.

What does it mean for you?

If you are planning to borrow, raise investment or apply for funding this year, make sure your numbers are ready before you start the conversation.

You should be able to explain:

• how much funding you need
• what the money will be used for
• how it will support growth
• whether your cash flow can support repayments
• what your current margins look like
• how the business would cope if sales are slower than expected

A funding application is much stronger when it is backed by clean accounts and a realistic forecast. If your bookkeeping is behind or your numbers are unclear, fix that before approaching lenders or investors.

For some businesses, finance will be useful for growth. For others, it may simply add pressure. The key is knowing the difference.

Late payments are putting pressure on SME cash flow

Late payments have returned to the headlines this month, with new figures suggesting they are costing the UK economy billions and leaving small businesses waiting weeks to be paid.

For London SMEs, this is a familiar problem. High rent, payroll, tax and supplier costs mean businesses often need cash in the bank long before customers settle their invoices.

The frustration is that a business can be profitable on paper and still struggle day to day if invoices are paid late. This is especially true for agencies, consultancies, construction firms, professional services businesses and suppliers working with larger clients.

Late payment does not just create short-term stress. It can delay hiring, slow investment, increase reliance on overdrafts and make it harder to plan confidently.

What does it mean for you?

Business owners should treat credit control as a core finance process, not an afterthought.

This month is a good time to review:

• payment terms
• invoice timing
• deposit requirements
• direct debit options
• aged debtor reports
• client credit limits
• follow-up processes
• late payment wording in contracts

If you regularly wait more than 30 days to be paid, you may need stronger systems.

That does not always mean taking a harder tone with clients. Often, the biggest improvements come from simple changes: invoicing immediately, making payment details clearer, following up earlier, and agreeing terms before work begins.

Good cash flow management is not just about chasing overdue invoices. It is about designing your process so fewer invoices become overdue in the first place.

Retail spending improves, but London businesses should stay cautious

Retail sales improved in May, helped by hot weather, promotions and stronger demand for seasonal products such as fans, outdoor furniture and summer goods.

For London retailers, hospitality businesses and consumer-facing brands, this is encouraging. Better weather, major events, tourism and the summer calendar can all help bring customers back into high streets, shopping areas, restaurants, pubs and leisure venues.

However, one strong month does not mean consumer confidence has fully recovered. Many households are still cautious, and businesses are still dealing with higher wage costs, rent, insurance, utilities and supplier prices.

For London businesses, the risk is mistaking a temporary seasonal boost for a lasting improvement in demand.

What does it mean for you?

If sales have picked up, use the opportunity to strengthen the business rather than simply increasing spend.

Retail and hospitality owners should review:

• which products or services are actually making money
• whether discounts are protecting margin
• how much stock is being held
• whether staffing levels match demand
• whether opening hours are profitable
• how summer cash flow compares with quieter months
• whether suppliers are still competitively priced

A rise in sales is only useful if it improves cash and profit. If higher sales are being matched by higher wage costs, waste, rent or discounts, the business may not be in a stronger position.

This is where regular management accounts can help. They show whether growth is improving the bottom line or simply making the business busier.

London hospitality remains under pressure from staffing and costs

The hospitality sector has had another difficult month, with operators continuing to warn about labour costs, tax pressure and fragile consumer demand.

The National Living Wage increased from April 2026, and London hospitality businesses are particularly exposed because staffing, rent and supplier costs are already high. For pubs, restaurants, cafés and hotels, even a small increase in wage or energy costs can have a significant effect on margins.

There are still opportunities in the sector, especially with summer demand, tourism, events and the World Cup helping footfall in some locations. But many operators are having to make careful decisions about opening hours, menu pricing, staffing levels and supplier contracts.

What does it mean for you?

Hospitality businesses should not rely on busy trading periods to solve structural margin problems.

If you run a restaurant, café, pub, bar or hotel, now is a good time to review:

• gross margin by menu item
• wage cost as a percentage of sales
• quiet trading periods
• supplier price increases
• booking patterns
• wastage
• card fees and delivery platform costs
• VAT and PAYE payment dates

A business can be full and still be under financial pressure if pricing and staffing are not properly controlled.

If your costs have changed since April, your prices and forecasts should change too. Waiting until year-end accounts are prepared is too late to find out that margins have been squeezed.

Brixton Market highlights the pressure on London independents

The campaign around Brixton Market has been one of the most closely watched local business stories in London this month.

Traders and community groups have been trying to raise funds for a community-led bid for Brixton Village and Market Row amid concerns about rising rents, private ownership and the future of independent businesses in the area.

While this is a specific Brixton story, the wider issue applies across London. Independent businesses often depend on local identity, affordable premises and stable customer communities. When property ownership changes, the commercial environment can change quickly.

For many small businesses, rent is one of the biggest fixed costs. A sudden increase, a difficult lease renewal or a change in landlord strategy can put pressure on even a well-run business.

What does it mean for you?

If your business depends on physical premises, your lease is just as important as your sales.

London business owners should make sure they understand:

• when the lease ends
• whether there is a break clause
• how rent reviews work
• what repair obligations exist
• whether service charges could increase
• what notice periods apply
• whether relocation would be realistic
• how much cash would be needed to move

Many businesses only look closely at their lease when a problem appears. By then, their options may be limited.

If your lease renewal is due within the next 12 to 18 months, start planning now. That may include speaking to your landlord early, reviewing alternative premises, understanding fit-out costs, and building a cash buffer for any transition.

Final thoughts for London business owners

This month’s London business news points to a familiar theme: opportunity is there, but so is pressure.

AI support could help SMEs improve productivity. New finance support may make it easier for London businesses to understand funding options. Retail and hospitality may benefit from better weather, events and summer footfall.

But late payments, higher wage costs, expensive borrowing, rent pressure and cautious customers are still real challenges.

The businesses best placed to navigate the next few months will be those with clear numbers, strong cash flow control and a realistic view of profitability.

If you run a business in London and want clearer visibility over your finances, our accountants in London can help with bookkeeping, payroll, tax, management accounts, financial forecasting and strategic advice.

Speak to Accounts and Legal today to find out how we can support your business.

Reviewed and updated by: Neil Nichols, Founder of Accounts and Legal