Simon Sperryn says the level of confidence is now beginning to spread

The survey shows more companies in the UK capital are optimistic about future business.

Of the 101 companies surveyed, 31% are now optimistic about London's short to medium-term future - double last month's figure.

Rate cuts should boost consumer confidence

Simon Sperryn, Chief Executive of the London Chamber of Commerce, said "the driver for this improved outlook is undoubtedly the two recent interest rate cuts."

He said some businesses were indicating that the economic pessimism of the past months may have been "overdone".

Two other surveys seem to confirm the trend. Recruitment firm Reed Personnel Services reports that many firms have difficulties finding suitably skilled staff, an indicator that the labour market is holding up well.

Even the supposedly depressed manufacturing sector is affected, with 68% of employers reporting recruitment problems, up from 60% three weeks ago, the organisation said.

Nonetheless, according to the London Chamber of Commerce survey, more than eight out of 10 companies are pessimistic about the short-term outlook for unemployment.

Consumer confidence

Last Friday, a report from American Express pointed to buoyant consumer confidence. Some 30% of those polled said they felt more optimistic because of the two interest rate cuts during the autumn.

However, retailers are reported to be less than happy about the current level of consumer spending and many shops are offering discounts to shift stock.

UK businesses can hope for another boost this week. The Bank of England's Monetary Policy Committee is under pressure to lower interest rates again.

The pressure was increased last week when the central banks of the countries joining Europe's new single currency in January cut their rates.