New report finds that London business leaders are less optimistic in the UK economy

Wednesday 12th January 2022

One in five London business leaders expect the economic prospects for their companies to worsen this year

Results from the Q4 survey show that London business leaders are less optimistic in the UK economy and their own business prospects than they were last quarter

12 January 2022, London – London Chamber of Commerce and Industry (LCCI) have today published the results of their quarterly economic survey, the Capital 500, which seeks to gauge business performance and confidence levels in businesses of various sizes across the capital.

The survey, which interviewed leaders between 28 October and 11 December 2021, highlights the lack of confidence felt in the capital which correlates with the emergence of the Omicron variant and subsequent concerns around Christmas trading. Nearly two-fifths (38%) of firms said they expected the UK’s economy to worsen in the coming 12 months, while a third (33%) felt that the economic prospects for London would worsen.

London businesses were evidently less optimistic about domestic sales in Q4 than they were in Q3. Respondents were asked to assess the last three months compared with the third quarter of 2021 in terms of domestic sales, cashflow, business domestic orders and employment. While 26% of businesses reported an increase in domestic sales in Q3, this trend reversed in Q4 and a quarter (25%) of respondents reported a decrease in domestic sales. This was true of micro and larger firms.

The survey found that businesses’ cost pressures were intensifying. Firms were asked to indicate the extent to which costs of energy, fuel, raw materials (domestically and internationally), wages and borrowing had varied in the past three months and nearly two-thirds (64%) reported an increase in their fuel and energy costs, while nearly half (45%) said their domestic raw material costs had risen in Q4.

Richard Burge, Chief Executive of London Chamber of Commerce and Industry (LCCI), said:

“Our latest Capital 500 survey shows the severity of Omicron’s impact on London business and business leaders’ outlooks on the local and national economies. Against the period of growing optimism witnessed in the third quarter, the results of this survey are a stark reminder of the tumultuous conditions businesses are trading in.

“While London businesses have proved their resilience and adaptability, we encourage the Government to recognise this and stand ready to provide additional support where necessary.”

Key findings from the Q4 Quarterly Economic Survey

Cautious forecasts for growth reflected businesses’ uncertainty around the implications of Omicron for the labour market:

  • Less than one in five (17%) of firms expected the size of their workforce to increase over the coming months, falling from 20% in Q3.
  • However, the majority of firms (77%) expect the size of their workforce to remain the same.

The proportion of businesses looking to recruit and invest in training increased marginally in Q4:

  • The number of larger businesses actively hiring increased from 55% in Q3 to 69% in Q4.
  • Firms in inner London were more actively recruiting than those in outer London (22% vs. 15% respectively), and there was no change to the number of micro businesses looking to hire (13%).
  • Nearly one-fifth (17%) of London businesses reported an increase in investment in training in the last quarter.
  • There was no change to the percentage of firms who said they were operating at full capacity (43%).

Overall, the expectations for the UK economy took a notable downturn:

  • Nearly two-fifths (38%) of firms said they expected the UK’s economy to worsen in the coming 12 months, up from 22% in the Q3 2021 Capital 500.
  • The proportion of businesses that expect the economy to improve was 30% in Q4, down from 44%.
  • In a notable reversal of the trend in Q3, respondents were more likely to predict worsening than improvement in the economic prospects for London and the UK.

Read the full report here.

ENDS

Contact:

London Chamber Press Office

T:  +44 (0)20 7203 1897

M:  +44 (0)7827 241528

E:  press@londonchamber.co.uk

Notes to editors:

Savanta ComRes interviewed 503 London business leaders online between 28th October and 11th December 2021. Data were weighted to be representative of all London business leaders by size and broad industry sector. Savanta ComRes is a member of the British Polling Council and abides by its rules.