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London businesses weather economic storm in Q2 survey


Thursday 6 July 2023

Results from the London Chamber of Commerce and Industry (LCCI) second quarterly economic survey reveal London businesses continue to weather the storm in face of immense cost pressures and inflation.

LCCI’s quarterly economic survey, Capital 500 surveyed a total of 510 London business leaders between 26 April to 30 May 2023. The survey points to an encouraging rise in domestic demand for London businesses in Q2, with the balance for orders increasing for the first time in five quarters.

The second quarter of 2023 saw an improvement in domestic sales for London businesses. 24% of companies in the capital said sales had risen in Q2, up slightly from 21% in Q1.

39% of London businesses expect their profitability and turnover to improve in the next 12 months. Cashflow also saw a positive development with 22% of firms reporting an increase over the last quarter, up from 19% in the first quarter.

However, London businesses are more likely to hold a negative view of the UK’s prospects with 44% predicting that the country’s economic growth will worsen. More than two-thirds (69%) of London companies said their energy costs rose in Q2 2023 compared to the previous three months.

Reacting to the findings of the report, Richard Burge, Chief Executive of London Chamber of Commerce and Industry (LCCI), said: 

LCCI’s quarterly economic survey shows yet again the resilience and entrepreneurial drive of the London business community despite the economic headwinds. There has been an uptick in business confidence with 24% of London businesses expecting London’s economy to improve in the next 12 months. With stronger government support, London could lead the national economic recovery. Stubborn inflation figures require supply side measures to keep up the recovery momentum.”

Key findings from the Q2 2023 Quarterly Economic Survey:

  • Domestic orders also rose in Q2 2023 for the first time in five quarters. One in five (22%) London firms said their orders had increased compared to the previous three months, up from 15% in Q1. 13% of companies said sales had increased compared to Q1 2023. 11% of London businesses reported an increase in export orders last quarter.
  • Despite the immense cost pressures, 43% of firms said they expect the prices of their goods and / or services to rise in the next three months, down from 50% in the last quarter.
  • Energy costs are slightly less likely to have increased in the last three months compared to the three before, although the vast majority of businesses still report rising energy costs. More than two-thirds (69%) of London companies said their energy costs rose in Q2 2023 compared to the previous three months. This was down from 74% in the Q1 2023 Capital 500, although only 4% of businesses in the latest survey said their energy costs had fallen.
  • Inflation continues to be the top concern for 66% of London businesses suggesting that the current national economic crisis remains on the top of mind for business owners. However, this figure is down from 73% last quarter.
  • Around one in five (22%) London firms expect their workforce to grow in the next three months, unchanged from the Q1 2023 Capital 500. Encouragingly, only 5% think their employment levels will shrink. Larger businesses continued to be more upbeat on their staffing numbers in Q2 compared to micro firms (19%), with half of larger companies (51%) expecting their employment levels to grow in the coming three months.
  • Recruitment efforts by London businesses stalled for the first time in two years in Q2 2023. The percentage of firms who said they had tried to recruit last quarter shrunk slightly from 25% to 23%, due to a smaller share of micro businesses seeking to hire new staff (19%). By contrast, two-thirds (66%) of larger companies sought to recruit in Q2, up from 61% in the Q1 2023 Capital 500.

Notes To Editors:

  • 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 510 London business leaders between 26 April to 30 May 2023. All data were weighted to be representative of all London businesses by company size and broad industry sector. Savanta is a member of the British Polling Council and abides by its rules. Full data tables are available at www.savanta.com.
  • Read the full report here.
  • The Q2 survey was conducted before the Bank of England raised rates again, with signs that inflation is not falling at the pace it was expected to. Businesses will want to see concrete policy steps that could help to reduce the upward pressures on inflation, which in turn would reduce the need for further monetary policy tightening.

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