Tuesday 3 October 2023
London business confidence has stalled despite an ease in inflation, reveals Capital 500- the Quarterly Economic Survey (QES) of London Chamber of Commerce and Industry (LCCI). Only a quarter (25%) of firms anticipate the capital’s economy to improve in the next one year. This is in comparison with 38% firms which expect London’s economy to worsen in the next 12 months.
A sluggish growth could be attributed to a sharp pullback in confidence among larger businesses: the proportion of larger firms who think London’s economy will grow shrunk from 37% to 22%, while there was also an increase in the share who expect the capital’s economy to worsen (from 26% to 36%).
Inflation remains the number one concern for businesses, with 66% saying they were more concerned about inflation in Quarter 3 than they were in the previous three months. Despite the slight easing in the borrowing costs net balance, 41% of companies said they were more concerned about interest rates in Q3, up from 36% in Q2.
Small and micro businesses continue to look to the brighter side as they remain more optimistic than large firms despite high energy costs. Cost pressures continue to show tentative signs of easing in Q3 according to the latest Capital 500. Just under two-thirds (64%) of London businesses said their energy costs had increased last quarter, down from 69% in Q2.
Encouragingly, 22% of companies expect their workforce to grow over the coming three months.
James Watkins, Head of Policy and Public Impact at London Chamber of Commerce and Industry said:
“The Capital 500 yet again shows whilst there are signs of improvement in the capital’s economy, cost pressures remain high for businesses. It is for this reason that LCCI is campaigning for the Government to do more to boost the economy in partnership with business. This includes calling for surety over investment decisions when it comes to infrastructure, tackling high energy bills for all businesses and sustained action to deal once and for all with the capital’s skills crisis. Only by genuine partnership between Ministers, the Mayor of London, local authorities and business can we ensure that the capital’s economy remains resilient and strong.“
Stephen Jones, Policy and Research Manager at London Chamber of Commerce and Industry said:
“Our latest Capital 500 report suggests Q3 was a steady, if not unremarkable, period for London businesses with domestic demand largely unchanged. It was encouraging to see the improvement in export orders, though we look forward to seeing whether this is sustained in future surveys. We have seen a slight easing in cost pressures for London businesses, who will no doubt welcome the news that UK inflation continued to fall in August. Cashflow bounced as well in Q3, while businesses appear to be growing in confidence for their own prospects.”
In addition, London businesses seem more confident about their underlying financial performance this quarter. Both micro and larger firms were more upbeat on their turnover expectations. 42% of micro companies, expect their turnover to increase over the coming year. Profitability expectations strengthened in Q3 as well, with more than two-fifths (42%) of London companies anticipating their profitability to increase over the year ahead.
Notes to editors:
- Read LCCI’s entire report on Capital 500.
- Spokesperson is available to be interviewed on survey findings.
- About Capital 500- For over a decade London Chamber of Commerce and Industry (LCCI) has conducted a Quarterly Economic Survey (QES) of members to gauge business performance and general confidence levels across the capital. This is part of the biggest and longest running national private business survey, conducted by regional chambers of commerce across the UK every quarter.
- Savanta surveyed a total of 519 London business leaders between 1 August to 1 September 2023. All data were weighted to be representative of all London businesses by company size and broad industry sector.
About the London Chamber of Commerce and Industry
LCCI is London’s key hub for the business community. We are accredited by the British Chambers of Commerce and support our members’ businesses through a range of services, products, and events. We are committed to creating business connections and opportunities, and advocate on behalf of London’s business community.
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