London business are concerned – but not panicking – about Brexit, according to a widereaching new LCCI report London Businesses and Brexit: reactions, expectations and requirements. The report is the result of polling more than 500 businesses by ComRes, and in-depth roundtable discussions with LCCI members over the summer.
It is clear that London firms have been navigating a number of uncertainties following Britain’s vote to leave the EU, with concerns over continuing access to skilled workers and the status of EU nationals currently employed within London firms chief among them.
Reassuringly, initial indications are that London’s businesses are taking a pragmatic and level-headed approach to these challenges. They are very much focused on what needs to be done now to ensure that the whole country prospers in the years ahead. It is apparent that London businesses want policy makers to act decisively and to bring forward innovative measures that will maintain the ‘pull’ factors that make London an attractive location to set-up and succeed.
These findings are corroborated by LCCI’s latest Capital 500 business survey – the first since the Referendum – which found that in line with decreases seen in all indicators of companies’ performance over the last two quarters, expectations for the next 12 months continued to deteriorate to Capital 500 record lows. On balance, nine per cent of London businesses expected their overall company prospects to decline, moving into negative territory for the first time and down a record 22 points on last quarter.
There is clearly no room for complacency as we take the first steps towards a post-Brexit future. To bolster business confidence in a time of uncertainty, in our report we make a series of recommendations to both government and City Hall. First of all, uncertainty must be curbed. We welcome the indication by government that it will transfer all current Brussels laws and regulations onto parliament’s statute books, to be repealed or replaced as necessary going forward.
Second, the domestic agenda, and particularly the need for strategic infrastructure investment, must not be neglected. The government should use set-piece opportunities in the political calendar, such as the forthcoming Autumn Statement, to commit to investing or progressing strategic London infrastructure projects such as Crossrail 2 and additional East London river crossings.
Third, the government should enhance and expand devolution to London. Britain now has to look to make its way in the world outside the EU. However, the economic burden of paving that way ahead will fall most heavily on London – as a net contributor to the public purse and the main engine of the national economy. With that in mind, it is common sense to make sure that London has a greater say in how taxes raised in the capital are spent, to maximise its potential for growth.
Fourth, London must be provided with a flexible immigration system that works for London businesses. That means examining the potential of granting ‘indefinite leave to remain’ to EU nationals currently employed in London, and exploring the potential for a ‘Capital Work permits’ system to provide flexible access to future migrant workers to help meet London’s need for skilled workers.
Fifth, the UK’s international trade position needs to be boosted. Now more than ever there is a pressing need to encourage and support British businesses to engage in international commerce and help build a strong and prosperous UK economy. A cross-Whitehall national strategy for exports growth could coordinate this to target support to greater numbers of UK firms, particularly SMEs looking at overseas markets
Finally, a positive trade deal with the EU should be secured. Government must initiate and maintain a dialogue with London business to understand the potential barriers to future EU trade and single market access, barriers that could prove detrimental to the UK economy if not fully assessed before Brexit negotiations begin in earnest.
No-one is in any doubt that the Brexit negotiations will be testing and many hope that the Prime Minster can find a way to manage various competing demands and agendas towards a satisfactory end. For now, it is broadly business as usual across the capital as we all monitor developments. However, to ensure that Brexit is turned into an opportunity for London and the wider UK in the mid to longerterm, decisive action is required, from both the government and City Hall – now.
Thomas Wagemaakers, LCCI Policy Research Officer