The confidence of business leaders in London in the future prospects for their firm has fallen to its lowest level for nearly three years according to the latest Quarterly Economic Survey from the London Chamber of Commerce and Industry (LCCI).
Only 38 percent of business leaders believe the prospects for their business will improve in the next 12 months, an 11 percent drop on the previous quarter and the lowest level since Q2 in 2009.
On a more positive note, export markets continue to provide relief for many businesses with exports sales standing at +10 percent while the balance for export orders stands at +4 percent. This is compared to continuing weakness in the domestic market with sales at -3 percent, although this figure has improved slightly since the last quarter. Domestic orders remain negative at -8 percent.
Nearly a quarter (22 percent) of London businesses reported a fall in the size of their workforce during the fourth quarter compared to just 16 percent reporting a rise. Just 15 per cent expect their workforce to rise in the coming quarter. However, the vast majority (70 percent) expect their workforce to stay the same suggesting lack of confidence in the future is forcing many to put off employing new staff.
This lack of confidence is also reflected in companies’ investment plans with almost two-thirds (65 percent) of firms planning no investment in plant and equipment in the next 12 months while 67 percent said they had no plans to change investment in training.
The LCCI believe the government could help by doubling the Annual Investment Allowance to £50,000 in the next tax year to encourage businesses to invest in their plant and equipment. Extending the national insurance holiday for start-ups to London and the South East would encourage firms to recruit. Action to help smaller firms take advantage of export markets is also needed.
Colin Stanbridge, Chief Executive of the London Chamber of Commerce and Industry (LCCI) said: “Clearly these figures are disappointing but not unexpected with the uncertain environment continuing to badly affect businesses across the capital. Confidence is low and this is creating a degree of inertia with many continuing to hold off investment in both staff and equipment.
“While we acknowledge that the economic environment cannot be controlled by the government there are practical and affordable steps they can take now to help ease the situation, rebuilding confidence and relieving some of the pressure on London businesses.”
ACQ Magazine more news…