London business optimism increases
By Daniel Hunter
London businesses are more optimistic than six months ago about the prospects for the economy and for their own companies, but anxiety about the Eurozone crisis is curbing hiring and investment plans.
Encouragingly in the latest CBI/KPMG London Business Survey of 264 companies, 41% of respondents say they feel more optimistic about the prospects for the economy over the next six months, a sharp rise from the December survey (13%). Just under half (47%) of London firms say they feel more positive about their own six-month business prospects, up from 31% in December.
But this rise in optimism is tempered by concerns over the ongoing Eurozone crisis. The number of employers now freezing their recruitment has more than doubled to 51%, from 23% six months ago, with only 16% now hiring as normal, compared with 54% in the December survey, and the lowest figure for 18 months.
In general, investment intentions in all categories have not reached the level they were at in mid-2010. A quarter of companies (24%) plan to decrease their investment in IT, equipment, plant and machinery over the next six months, or make no investments at all in this area.
“In this milestone year for London, it’s great to see that the capital’s firms are more optimistic than six months ago, but the shadow cast by the Eurozone crisis continues hang over businesses and the economy," Sara Parker, CBI London region director, said.
“Increased Eurozone anxiety means employers are reluctant to invest, take on new people or expand their businesses.”
The number of firms rating London as a good place to do business has risen to 86% from 83% six months ago. For small and medium-sized companies the increase is even greater from 74% in December to 81% in this survey. At the same time the number of respondents who... continued on page two >