Monday 1 July 2019
Figures out today show that London’s businesses were buoyed by recovering domestic and export sales during the second quarter of the year in the capital, but recruitment challenges and fluctuations of costs continued to loom large.
The figures come from London Chamber of Commerce and Industry’s ‘Capital 500’ survey - which is carried out on a quarterly basis, polling over 500 London businesses - making it the largest and most authoritative business survey in the capital.
As announced last week, the survey’s sales and exports indices are up, and all business confidence indicators also increased in this quarter, the first time this has happened for a year. Expectations for the wider economic outlook also improved, while still remaining gloomy overall.
However, with unemployment at its lowest levels since the 1970s, London’s recruitment market remained challenging during Q2 for businesses and workers:
- A quarter (23%) of London businesses trained up an existing staff member in order to acquire new skills:
- 4 in 5 (82%) London businesses didn’t try to recruit during the second quarter of this year, despite the fact that 61% of all businesses are operating below full capacity.
- Of those businesses in the capital that tried to recruit during Q2, 79% of those were looking to fill full-time roles and 61% say they had difficulties.
- A quarter (23%) of London businesses say that pressure from employees to increase wages has increased in the last 3 months.
David Frost, Chief Executive of the London Chamber of Commerce and Industry, said:
“Most businesses looking to hire staff still face difficulties when doing so, with firms often concerned at certain skills deficits within London’s labour market. Around a quarter of businesses turned to investing in their existing staff during the second quarter of the year, in order to cover skills gaps. That is welcome but illustrates how tight London’s labour market is.
After Brexit it will be important that the UK’s immigration policy is well-designed so that firms can continue to find well-trained and capable staff. We at LCCI have concerns about the proposed £30,000 salary threshold and welcome signals this may be reconsidered by the next government. It is also vital that our domestic skills system is working as effectively as possible.”
Completing the economic picture for Q2, the figures also showed business costs also proving a challenge to the capital’s businesses over the last three months:
- Nearly half (46%) of businesses reported increased fuel costs.
- 41% experienced increased costs for their business’s energy.
- 31% are seeing an increase in the cost of raw materials sourced domestically and 27% for those sourced internationally.
- One in five (21%) businesses say they are under pressure to raise prices due to raw material prices or finance costs.
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NOTES TO EDITOR:
Following the survey results, LCCI makes four key recommendations to help the Mayor and the Government ensure London businesses can feel better equipped for the future:
- Continue to prepare for a no deal Brexit. An exit on WTO terms on the 31 October is a real possibility. While a Brexit deal of some kind remains everyone’s preference, it is not in the Government’s power to take no deal off the table, it is therefore important that planning and preparation for that scenario continue.
- Migrants from all over the world have a vital role in London’s economy. The Government should reconsider the proposed £30,000 salary threshold on migrants and ensure that the UK’s post-Brexit immigration policy does not restrict firms’ access to well-trained and capable staff from overseas.
- The Government should commit to progressing London Strategic Infrastructure Projects (LSIPs), notably Crossrail 2, fixed river crossings in East London and a new runway at Gatwick after Heathrow.
- National and local government should work to make London’s housing market more functional. The government should think again about its proposals to change s21 of the Housing Act. The Mayor should consider a limited intervention, with suitable safeguards, to make better use of poor quality and ‘brownspace’ land within the metropolitan Green Belt to help house police, fire and paramedic staff.
- ComRes surveyed a total of 503 London business leaders online between 10 May and 11 June 2019.
- All data were weighted to be representative of all London businesses by company size and broad industry sector.
- ComRes is a member of the British Polling Council and abides by its rules. Full data tables are available at www.comresglobal.com.