Tuesday 7 October 2014

UK uncertainty affects London business activity

Domestic activity dropped sharply in the run up to the Scottish referendum, a survey of London businesses1 has revealed. Firms in the capital reported an 11 point decline in domestic sales from the previous quarter - with 19% of companies reporting an increase in domestic sales and 18% reporting a decrease, likely caused by uncertainty over Scotland's future within the UK.

The figures come as London Chamber of Commerce and Industry (LCCI) published the third quarter results of its "Capital 500" Quarterly Economic Survey, London's biggest and most authoritative business survey of over 500 business leaders, in partnership with leading polling agency ComRes.

Despite a fall in activity across some indicators, London businesses remain generally optimistic about their future prospects with over one-third (37%) of Capital 500 firms expecting improved company performance over the next year. More positive was news of firms displaying a growing willingness to invest in their business through staff training (up five points) and capital equipment (up seven points).

Interest rates remain a significant concern to Capital 500 businesses, with nearly a third (32%) more worried about potential rate rises this quarter than three months ago. With employment levels registering a six point decline in the last three months, the need to keep interest rates at a low level to maintain stability for businesses was firmly reinforced.

Chief Executive of LCCI Colin Stanbridge said: "Businesses continue to be confident about their own performance and London's economic prospects, and news that London firms are investing more in capital equipment and staff development is particularly reassuring.

"However, the reported fall in domestic sales is concerning, and may be linked to the degree of uncertainty about the United Kingdom's future status in the run-up to the Scottish Referendum. With the Union now assured, Government should move to give business more detail on its promised new devolutionary arrangements for Scotland and England. Part of that must focus on delivering greater control of finances to London to enable our capital to maximise its growth potential."

Chairman of ComRes Andrew Hawkins said: "With David Cameron setting his sights on the UK having the highest employment rate of any major economy in the next five years, he will be encouraged that more London businesses expect an increase than a decrease in their workforce size in the next three months. However, with almost half of those who have tried to recruit in the last three months encountering difficulties, the challenge will be to match employer needs with the skills currently on offer by applicants."

ENDS

Media contact:
Sean McKee
T: +44 (0)20 7203 1882
M: +44 (0)7500 013166
E: smckee@londonchamber.co.uk

NOTES TO EDITOR:

1. ComRes surveyed a total of 516 London business leaders online between 26 August and 22 September 2014. All sectors of the London economy were represented including production (4%); property and construction (12%); motor trades (5%); retail and wholesale (6%); transport and storage (8%); information and communication (5%); finance and insurance (13%); professional, scientific and technical (8%); business services (23%); education (2%); health (4%); and arts, entertainment, recreation and other services (8%). 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 and abides by its rules. Data tables are available on the ComRes website, www.comres.co.uk.
2. 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.
3. Colin Stanbridge is available for further comment and interview.