Tuesday 9 January 2018
Businesses need more support to address challenges in 2018 says London Chamber of Commerce and Industry
Businesses need more practical help this year to help them overcome recent setbacks as both confidence and economic outlook continued to fall, a leading business lobby group has warned.
In its last Quarterly Economic Survey of 2017 London Chamber of Commerce and Industry (LCCI) found that confidence figures continued to decline for the fourth consecutive quarter while expectations for the year ahead remain negative for both London and the UK.
Meanwhile more than half of businesses trying to recruit came into difficulty, while export and domestic demand fell and most analysed business costs rose.
Chief Executive of LCCI, Colin Stanbridge said: “Our new survey findings show why 2018 will be such an important year for London firms. It is crucial that efforts are maximised to strengthen the foundations of London’s economy to deal with challenges ahead.
Key among these are enhanced support to get more small businesses exporting more and limiting the overall costs burden that the capital’s businesses have to endure”.
LCCI makes four key recommendations following the latest survey to help the Mayor and the Government ensure London businesses can feel better equipped for the future.
Recommendation 1: Government should invest in better export support to help London businesses (especially SMEs) to exploit export opportunities in both new and established markets, including increased funding for trade missions that include practical advice and local knowledge.
Recommendation 2: LCCI urges the Migration Advisory Committee (MAC) to make substantive interim recommendations to government in advance of the final report due in September 2018 – only seven months before Britain is set to formally exit the EU in March 2019.
Recommendation 3: City Hall should commission an economic assessment of Ultra Low Emission Zone (ULEZ) proposals, which can be used to inform supporting measures for businesses and facilitate the transition.
Recommendation 4: The new London Plan must prioritise the entry of smaller builders into the market, prioritise affordable business space and secure the capital’s future resilience.
Key findings from Capital 500 Q4 2017 survey include:
- During Q4 2017 domestic demand continued to decline and figures remained in negative territory for the second consecutive quarter, as more businesses reported a decline than an increase in their domestic orders and sales.
- Both export sales and export orders declined compared to last quarter.
- Although the Capital 500 employment balance continued to rise during Q4 2017, the figure stayed in negative territory for the sixth consecutive quarter.
- The balance figure for businesses’ employment levels over the past three months stayed roughly level compared to last quarter, rising by 1 point to a net balance of -1. In contrast, expectations for the next three months fell by 2 points, while on balance businesses expected their workforce to grow (net +3).
Recruitment and training:
- 15% of Capital 500 companies tried to recruit during Q4 2017, up 2 points from Q3 of this year. Of this, 52% recruited for full time roles and 48% for part time positions.
- Of companies trying to recruit, 57% encountered difficulties in recruiting, in particular for Professional/managerial roles (32%) while skilled manual/technical roles (45%) continued to be the hardest to fill for recruiting Capital 500 companies.
During Q4 2017, a rise was reported for most analysed business costs.
- While the balance figure for the cost of raw materials sourced domestically went up by 6 points (to +29), the cost of raw materials sourced internationally saw a 4-point drop (to +23).
- The cost of borrowing also went up (by 5 points to +14), while on balance the pressure of employees to increase wages stayed the same as in last quarter (at +18).
Cashflow and investment:
- During Q4 2017, a decline was reported for both the cashflow figure and the capital investment figure.
- The Capital 500 cashflow balance went down by 6 points and a negative figure (-9) was recorded for the seventh consecutive quarter, resulting in a Capital 500 joint record low.
- All business confidence indicators continued to decline during Q4 2017.
- The balance figure for overall company prospects fell for the third consecutive quarter, as a net balance of businesses expected economic prospects for their company to worsen over the next 12 months (-8). This figure has not been in positive territory since the second quarter of 2016.
- The figures for turnover expectations and profitability expectations reached a joint record low: +7 for turnover expectations and +2 for profitability expectations.
- Expectations for both the UK and London economy fell compared to last quarter, and remained negative overall.
- While the balance figure for expectations of the UK economy were roughly stable (down by 2 points to -30), expectations for London’s economy fell by 5 points (to -26). Both figures have now been in negative territory since the first poll following the vote to leave the EU.
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NOTES TO EDITOR:
- London Chamber of Commerce and Industry (LCCI) is the capital’s largest and most representative business organisation, with members ranging in size from multi-national companies to SMEs and sole traders.
- Colin Stanbridge is available for further comment and interview.
For over a decade LCCI has conducted a Quarterly Economic Survey (QES) to gauge business performance and general confidence levels across the capital. This is part of the longest running national private business survey, conducted by regional chambers of commerce across the UK every quarter.
- ComRes surveyed a total of 577 London business decision makers online between 2 November and 27 November 2017. All data has been weighted to be representative of all London businesses by company size and broad industry sector.
- ComRes is a member of the British Polling Council. Full data tables are available at www.comresglobal.com
The balance figures represent the percentage of firms that reported an increase minus the percentage that reported a decrease or firms that selected improve minus the percentage that selected worsen.
View the full Q4 2017 report here
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