What London’s quarterly economic survey results say about Q2’s performance…
Last week, London Chamber of Commerce and Industry (LCCI) launched their latest London Quarterly Economic Survey with Capital 500 for Q2 2015. They surveyed 510 London business leaders between 7 and 20 May this year.
The headlines for London’s performance in Q2 include: a 3% reported increase in domestic sales; a 6% reported decrease in cash flow; a 4% decrease in employment; and a 6% increased investment in training (note that these are balance figures that represent the percentage of firms that reported an increase minus the percentage that reported a decrease).
At the launch of this latest report and commenting on the data was James Ashton, Executive Editor, Evening Standard, The Independent, The Independent on Sunday, i; Katharine Peacock, Managing Director, ComRes; Vicky Pryce, Chief Economic Adviser, CEBR; and Colin Stanbridge, Chief Executive, London Chamber of Commerce and Industry.
Katharine Peacock presented the results, and caveated them with the fact that the metrics will have been influenced by the timing of the survey – the data was collected during the uncertainty of the election period and in the days following the result. However, on the whole, metrics were still an improvement on Q1. She pointed out that employment is consistent and expectations are rising, as indicated by the investment in training. Although she added that skilled and manual technical labour is low and business leaders are experiencing problems getting the right staff. Colin Stanbridge said that for London, which is built on migrant workers, it would be best to avoid any further restrictions in this space.
Economist Vicky Pryce commented that the survey showed business confidence has increased and that leaders are planning for growth, but warned this could signify a ‘London bubble’ which is not representative of the rest of the UK. Meanwhile, Stanbridge argued that London needs greater autonomy of the revenue raised in the City for infrastructure, something which LCCI continues to lobby for. He has also outlined how private investors can help ‘plug the infrastructure gap’ – if we allow them to – in a recent City AM article.
With greater certainty comes greater investment: investment in training and investment in plant and equipment are both up on Q1. Pryce warned that despite the increases in London, the world economic growth is still slow. This will only go up, she said, in line with increased consumer spending for which increases in income are necessary. Consumer spending is also dictated by consumer debt, so keeping interest rates low will encourage economic growth. She forecasted that the recent outcome in Greece’s financial crisis will impact results for the next quarter.
Executive Editor of The Evening Standard and Independent, James Ashton, felt that London businesses had “breathed a collective sigh of relief” at the election result, and that confidence was right to be up, “though not euphoric“. He also highlighted the significance of the skills shortage and the negative impact this may have on start-ups, and added that the housing shortage and transport issues were also key risks to London businesses, in agreement with Stanbridge.
Looking ahead, 15% of business leaders surveyed expect their workforce to increase in the next three months as the Conservatives settle into power and implement their policies. Business leaders are hopeful that new business secretary, Sajid Javid, will succeed in his mission to finally cut red tape. It follows then that over the next 12 months 40% of business leaders expect their prospects to improve, 39% expect increased profitability and 49% expect UK growth to improve. An optimistic outlook for the UK, but one that could perhaps be thwarted by on-going economic pressures in the rest of the world, during what is a rocky period for both Greece in the EU, and China.
See the write up about what the General Eection means for London business here.