London-based companies are in a bullish and expansion-minded mood, according to a survey by the Confederation of British Industry and advisory firm KPMG. The majority of London’s businesses feel much more optimistic about prospects for the economy over the next six months, the London Business Survey found. This is a substantial increase on the previous quarter and the highest level of optimism recorded since the end of 2010. More than two-thirds said they have plans to expand over the next year, with a slight increase in the number looking to do so in London.
Sara Parker, a CBI director, said: “London’s businesses are much more optimistic about both the economy and individual business prospects than they were three months ago. It’s encouraging that so many have plans to expand but worrying that more aren’t planning to do so in the capital."
While 56% of respondents said that they feel more optimistic about prospects for the economy over the next six months – up substantially from 26% three months ago – only 6% feel more pessimistic compared with 18% three months ago and 22% at the end of 2012. Just more than half of respondents (51%) are optimistic about the prospects for their own businesses over the next six months, up from 40% three months ago. Just 7% are gloomy about their prospects for the next six months compared with 9% three months ago and 15% in mid-2012.
The top three concerns for the next year cited by London businesses remain the same as six months ago: the lack of economic growth (62%), uncertainty about global economic prospects (41%), and lack of a clear government strategy to deliver growth (35%).
Despite these concerns, more than two-thirds of businesses have plans to expand over the next year (67% compared with 62% three months ago), with a growing number looking to do so in London (32% from 29% in July), but much lower than the proportion recorded at the end of 2012 (54%).
Growing confidence about the economy is reflected in businesses spending intentions, which are now near the previous peak recorded in mid-2010. But the picture is mixed with companies planning to spend relatively more in recruitment and training, marketing and promotion, and IT, plant and machinery, but relatively less on product and process innovations and land and buildings.
The CBI/KPMG London Business Survey is conducted quarterly to monitor London companies’ views on the capital as a place to do business. A total of 144 businesses took part, and the survey was conducted between 12 July and 2 August 2013.