There has been a “dramatic deterioration in business confidence” in London according to a new survey of 1,369 firms in the capital, with three-quarters of them feeling less optimistic about the prospects of UK economy as a whole in the coming 12 months than they had been about the previous year.
The research, conducted over the summer by YouGov for the London Chamber of Commerce & Industry and cross-party local authority group London Councils, showed that the concerns created by Covid-19 have been replaced by fears about inflation.
Sixty per cent of the businesses surveyed identified rising inflation as “a key threat to economic activity”, the two organisations said, followed by lack of consumer spending and difficulties caused by low turnover and cashflow issues, picked by 34 and 31 per cent respectively.
Three-quarters said they had seen increases in operational costs during the year before the survey, with the prices of raw materials and energy rising the most. A fifth of the businesses reported energy price rises of more than 200 per cent during the period in question.
The effects of Brexit were identified as a source of difficulty by around half the businesses, with 52 per cent blaming it for supply chain problems and 49 per cent saying it had reduced the availability of suitably skilled employees.
Reacting to the findings, London Chamber chief executive Richard Burge said “in recent months business have been battling to stay afloat against significantly hostile headwinds caused by the cost of doing business crisis, inflation and the threat of recession”. He added that he hopes the new Chancellor’s autumn budget statement “outlines a road to recovery” despite less than ideal circumstances.
For London Councils, deputy chair Darren Rodwell gave particular emphasis to skills shortages, saying that more could be done with “greater devolution of powers and funding to all UK regions” and underlined continuing efforts to make the apprenticeship levy more effective. Rodwell also stressed that “London boroughs stand ready to work alongside government to safeguard the future of our businesses, as we did during the pandemic”.
The London Business 1,000 report can be read in full here.
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