Tuesday 10 July 2018
London businesses need more support to build international trade links and capitalise on an upsurge in confidence London Chamber of Commerce and Industry has said.
A survey, of more than 500 London businesses, carried out by ComRes on behalf of the London Chamber of Commerce and Industry (LCCI) found that business confidence in the prospects for their business was no longer negative – for the first time since shortly after the referendum.
But it warned that work must urgently be done to prevent that confidence slipping again.
Chief Executive of LCCI, Colin Stanbridge said:
“Despite an improvement in many of these figures much still needs to be done to ensure London businesses continue to prosper, now and in the future.
“To boost the outlook and confidence of the business community, the Government must urgently boost investment in export support to enable firms to benefit from opportunities to increase trade around the world.”
Previous ComRes polling for LCCI in Q1 2018 has shown that exporting London businesses continue to face significant barriers to increasing their exports.
Almost four in ten exporters (38%) encountered difficulties finding overseas customers, agents or distributors, and two in ten exporters (20%) reported difficulties because of the cost and quality of international transport connections
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: The Government should consider stepping up efforts to support exports growth through subsidised trade missions and increased funding for the Department for International Trade (DIT). Furthermore, with Brexit on the horizon, LCCI calls on the Government to boost airport capacity, including by enabling a new runway at Gatwick.
Recommendation 2: London boroughs should employ more flexible definitions of local labour when setting Section 106 requirements to allow apprentices to move across boroughs and complete their training.
Recommendation 3: The GLA should outline support measures for businesses affected by ULEZ. Furthermore, publication of economic assessment of impacts on London businesses, particularly SMEs, would be welcome.
Recommendation 4: The proposed 90-week transition period will not be enough for many London businesses. A three to five-year period, under the current UK-EU arrangements, would be deemed reasonable by the greater number of firms to adjust to the new circumstances.
Key findings from Capital 500 Q2 2018 survey include:
Domestic and export demand:
- More businesses continued to report a decline in domestic demand than an increase during Q2 2018, while figures have now been in negative territory for eight out of the last nine quarters.
- In Q2 2018, a slight uptick was recorded in the Capital 500 export demand figures, while four in ten respondents (40%) reported they had been exporting during the past three months.
- During Q2 2018, the employment balance dipped slightly, and continued to be negative overall for the eighth consecutive quarter, with more businesses reporting a fall than a rise in employment levels.
- Capital 500 businesses continued to be positive about their workforce size for the next three months, with on balance 6% expecting their employment levels to rise – up 2 points on last quarter.
Recruitment and training:
- During Q2 2018, the balance figure of companies looking to invest in training turned positive again, as on balance 2% of respondents raised their planned investment The percentage of companies recruiting over the last three months rose by 2 points to 15%.Of these, 64% recruited for full-time and 42% for part-time positions.
- Of companies trying to recruit over the last three months, 60% encountered difficulties, the joint highest recorded Capital 500 level to date, and up 9 points on Q1 of this year
- The main cost factors putting pressure on businesses to raise their prices were raw material prices (24%) and other overheads (33%).
- 23% of businesses, on balance, reported they expected the price of their goods or services to rise over the next three months (+21% for micro businesses; +36% for larger businesses).
Cashflow and investment:
- While both the cashflow figure and the capital investment figure rose on last quarter, they remained in negative territory.
- While the capital investment figure for larger businesses dropped by 5 points, it stayed in positive territory at +10%. In contrast, the figure for micro businesses continued to be negative at -3%, although it rose by 3 points on last quarter.
- The Capital 500 balance figure for overall company prospects logged a record level increase on last quarter (up 10 points) and is no longer in negative territory at 0% - the joint highest recorded level since Q2 2016, the last poll before the EU referendum.
- While the overall prospects for micro as well as larger businesses rose by 9 points on Q1 of this year, the figure stayed negative for micro businesses (-2%) and positive for larger businesses (+13%). On that same measure, both inner London and outer London businesses recorded a balance figure of 0% overall.
- Expectations for both the London and UK economy remained negative on balance, and have now been in negative territory for respectively eight and nine consecutive quarters.
- Inner London businesses remained more pessimistic about both the national and London economy (-21% and -14% respectively) than their outer London counterparts (-13% and -9% respectively).
T: +44 (0)20 7203 1897
M: +44 (0)7884 252881
NOTES TO EDITOR:
- 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.
- Since Q2 2014, LCCI has partnered with ComRes, to expand the survey beyond LCCI membership to poll a panel of London businesses - the Capital 500 - that are fully representative of the London economy by business size and broad industry sector. Data on the highest recorded levels refers to Capital 500 data since Q2 2014
- In Q2 2018 ComRes surveyed a total of 505 London business leaders between 11 May and 8 June 2018. In Q1 2018 ComRes interviewed 561 London business leaders between the 15 February and 15 March 2018.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
- 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.
- Read the full report here
- Follow the discussion on Twitter using #Capital500