London Business Optimism Jumps
The latest CBI/KPMG London Business Survey has seen business optimism amongst the capital’s firms jump from 56% last quarter to 69%, the highest level in three years.
Of the respondents to the survey, 73% said they were looking to expand over the next year with 63% planning to increase business in London or the UK and 47% of firms expecting to grow overseas.
Looking at the figures for London businesses, they are already well connected overseas with 88% already doing business with Europe, 69% connecting with China, 64% of London firms trading with India and 66% doing business with the rest of Asia.
When asked about how they could better do business abroad, businesses stated that an improved regulatory environment, promoting London and the UK on the international stage and making improvements to the visa environment to facilitate high-skilled migrants were key to the future.
At home, London businesses believed that infrastructure investment was vitally important, followed by continuing to develop the right skills amongst the workforce and further pushing the education agenda.
With the economy improving, London firms were asked about how they were going to pay their staff this year and 28% said they would offer a pay rise in line with the Retail Price Index (RPI). 24% of firms questioned said they would target pay rises for just some of their staff.
As for recruitment, 70% of businesses said they will only hire when absolutely essential and 20% of London companies would have a recruitment freeze. Whilst 33% of firms are still reporting redundancies, the positive news in the employment arena is that 56% of companies are taking on apprentices, up from 43% in the last quarter.
Finance conditions appear to be appropriate for most London firms with 77% reporting that the credit landscape is about right and only 22% saying that they felt access to finance was still stifled.
Sara Parker, Director at CBI London, said of the latest figures:
“Improving confidence about the economy is feeding through into upbeat expansion plans. To successfully re-balance the economy we need UK firms to expand overseas, so it’s good to see that many London businesses plan to branch out to new markets.”
“At the same time we need to make sure that London stays ahead as an investment location in the face of tough international competition. Above all, we need sustained investment in infrastructure, especially roads and airports, and a supportive skills and immigration system.”
Richard Reid, KPMG’s London Chairman, added:
“Access to a wide talent pool is vital in keeping our businesses growing, and the supply of skilled staff in London is fast becoming a major stumbling block in keeping us competitive. Investment in the skills agenda has to be as high a priority as investment in infrastructure if London is going to be able to compete effectively against the likes of Shanghai and Mumbai.”
“More London businesses are now looking to take on apprentices, which is great news and announcements made in the Autumn Statement last week around apprenticeship funding will help with the skills agenda. However, London businesses need to have a greater role in how apprentices and students coming into the workplace are trained if we are to get the best out of our workforce.”
“London houses the UK centre of global commerce with many businesses already operating in or exporting to overseas territories and many see it as the natural next step in their growth plan.”
“Europe remains vital for being the hub of the single European market and expanding our growth in the major emerging markets which is so important to our future. But greater awareness of UKTI initiatives designed to help UK plc needs to take place to make sure our London business community do not miss out on the opportunities of the substantial growth offered by these new economies.”
The next CBI/KPMG London Business Survey will be an important indicator as to whether the economic outlook continues and will be available around March 2014.