Action must now be taken to strengthen the foundations of the capital’s economy and boost confidence amongst its businesses.
This was demonstrated by the latest LCCI Capital 500 Quarterly Economic Survey (QES) results which were released last month at GVA’s Gresham Street offices. The survey, based on a representative sample of more than 500 London businesses interviewed by leading polling company ComRes, found that export demand levels had reached their joint lowest recorded level of the survey, and that business confidence levels had not been this low since the first poll after the EU referendum vote in 2016 – although it should be noted that the survey was undertaken ahead of the recent announcement that the UK and EU reached an agreement on a post-Brexit transition period.
Notwithstanding any impact this agreement might have had on business sentiment, CEBR economist and former joint head of the UK’s Government Economic Service Vicky Pryce commented that “there are serious worries in some service sectors such as retail and the hospitality industries, as the consumer is becoming increasingly cautious while construction also remains under the spotlight.” The Capital 500 results were discussed in more detail during a panel discussion with business editor for The Sun Tracey Boles, GVA’s senior regional director for London Ros Goode and ComRes’ executive chairman Andrew Hawkins.
The event was chaired by LCCI’s deputy chief executive Peter Bishop. Boles noted that despite some negative figures there are also positive signs, including recent rises in the UK’s reported productivity levels. Hawkins added that although in many areas micro businesses continued to report negative figures, larger businesses, including many corporates, still tended to have a positive outlook. Goode focused on positive policy interventions, including improvements to Thameslink services and the Elizabeth line which will soon be opened, all fundamentals to ensuring London will continue to be able to cope with growth and success.
The LCCI has argued that there are actions which can be taken to give a boost to confidence in the capital’s economy, leading to the following recommendations:
1. To protect vital work space as well as limit the cost of business space, the Mayor of London should seek to secure permanent exemption beyond 2019 for Tech City and the Central Activities Zone from permitted development rights.
2. To boost the capital’s productivity and underpin domestic demand, targeted investment in London’s infrastructure is required – including revisiting proposals for fixed river crossings at Gallions Reach and at Belvedere to maximise growth potential in East London.
3. The Mayor must continue to work with London businesses to ensure they are consulted on skills provisions for Londoners. This includes seeking business input to help tailor the administration of the Adult Education Budget when it is devolved to London from 2019/20.
4. The proposed post-Brexit transition period of 21 months may not allow enough time for the bulk of firms to prepare for any potential changes to the trading environment. More time is needed to allow SMEs in particular to prepare.
Thomas Wagemaakers, Policy Research Manager, LCCI