Economic, Business Prospects Gloomy Among London Firms
A meagerly 13 percent of London businesses feel more optimistic about prospects for the economy over the next six months, compared with 43 percent in June, and optimism percent over the same period, according the latest CBI / KPMG London Business Survey.
In the latest bi-annual survey of 262 London business leaders, just over half (55%) say their top concern over the next year is the threat of a double-dip recession.
But companies are now less concerned than six months ago about reduced public sector spending which has dropped from second to seventh place. Although half (51%) of firms still think that public sector spending cuts will have a moderate impact on their business (down from 71% a year ago).
The number of companies only hiring when essential has increased from 59% in June to 64% in this survey, with 23% of businesses implementing recruitment freezes, broadly the same as six months ago (20%).
With just over seven months to go until the Olympics, an overwhelming 92% of London businesses think the Games will benefit London internationally, and three-quarters (78%) say they are ‘looking forward’ to the event.
As the Games move closer, more companies are starting to think about business planning around the event, with only 13% of firms not having considered the potential transport and logistics impacts (down from 40% in June).
However, the number of London businesses that feel prepared for these issues is still roughly the same as in June (32% compared with 36%), and the same number of firms as six months ago (39%) say they are still not prepared. Three-quarters of respondents (72%) feel they do not have sufficient information about the Olympic and Paralympic route networks.
Almost half of companies (49%) are now confident about dealing with staff absence during the Games, while 20% have not yet considered the issue.
Three quarters of companies say they do not have enough information about security during the Games, yet 62% say the summer’s riots in the capital have not dented their confidence in the authorities’ ability to deliver a secure Olympics.
In the other key London event for 2012, the mayoral elections, businesses felt that the top three priorities for candidates should be promoting London internationally, improving the capital’s infrastructure and strengthening support for small and medium-sized enterprises (SMEs).
The majority of London companies (83%) and a quarter of SMEs (74%) rate the capital as a good or very good place to do business.
Companies’ expansion plans remained at the same level as in the June survey with 58% of firms planning to expand over the next twelve months, 42% looking to do so in London.
When asked about the capital’s top strengths, London businesses ranked the skills and talent pool as the greatest, followed by access to global markets and proximity to customers/clients – these findings are the same as the last two surveys.
However, a quarter of firms (25%) have been negatively affected by the introduction of the annual cap on the number of tier 2 visas to non-EU migrants, with 63% reporting difficulty finding people with specific skills and 37% saying it was taking longer to fill vacancies.
London’s three major perceived weaknesses are overall operating costs, the tax environment, and transport, the same as in the June survey.
On transport, companies think that overall there have been relative improvements across all modes over the past six months, apart from the roads, where 47% of respondents thought the network had deteriorated, compared with 62% in June.
Respondents say that increasing capacity would be the best solution for addressing the pressures on London’s transport networks, followed by optimising the existing network, and addressing pricing pressures.
London businesses think that employment regulation is the most burdensome area of regulation, which has moved up from second place six months ago, followed by taxation, and health and safety. Companies say the burden of bribery and corruption legislation has increased in the last six months, and they now rank this as the fourth most burdensome area of regulation (up from seventh place last year).