Tech and creative fundamental to London
The tech and creative sectors are fundamental to London’s future prosperity, according to the latest CBI/CBRE London Business Survey.
Two thirds of the 271 respondents to the London Business Survey (65%) said that the tech and creative sectors were the principal sectors for the capital’s economic growth over the next five years, followed by professional services (49%) and FinTech (47%). With the vast majority of firms – more than nine in 10 (91%) – continuing to rate London as a good or great place to do business, bolstering the resilience of the city’s infrastructure is also key to securing the capital’s future growth. Nearly three quarters of firms want the government to push ahead with Crossrail 2 (69%) whilst over half of businesses (59%) want Heathrow’s third runway to be a priority project.
With the overwhelming majority of London businesses employing staff from the EU (88%), Brexit is having a significant impact on the capital’s companies. Just under three quarters of firms (73%) view uncertainty over the UK’s role in Europe as their top concern, whilst a similar number (69%) have developed, or are developing, a contingency plan for when the UK leaves the EU. Indeed, over a quarter of respondents (27%) indicated they are planning to move part of their operations overseas. Close to two thirds (62%) have, or are developing, a strategy to address skill shortages that could be incurred if restrictions are placed on EU nationals working in the UK.
Coupled with concerns about Brexit, only one in 10 companies (10%) feel more optimistic about the economy over the next six months (compared to 19% in the last Survey), whilst only 16% feel more optimistic about their own business prospects over the next half year (compared to 26% in the last Survey).
Eddie Curzon, CBI London director, said, ‘Despite the political uncertainty in the air, London continues to enjoy sound economic health and strong business fundamentals. Nine in 10 firms say our city is a great place to do business, whilst investment, expansion and hiring plans are all running high.’
‘The capital’s booming, world class tech and creative firms hold the key to unlocking the growth that will ensure the city remains a global business powerhouse for years to come. If the city can also push ahead with quality infrastructure projects – from HS2 and Crossrail 2 to Heathrow’s new runway – we will see London cement, and further, its reputation as one of the best places in the globe to live, work and grow a business.’
Despite the political uncertainty, the fundamentals of London’s business environment remain healthy. A majority of firms (60%) plan to expand their organisation in the next year, and over a third (39%) intend to increase their head count (compared to 23% who intend to make redundancies). Over half of firms (57%) plan to maintain their current investment plans, and nearly one in five (17%) intend to increase them.
Businesses in the capital are also optimistic about skills. Close to two thirds (62%) are confident that there will be sufficiently skilled people across all levels to meet their needs over the next five years, with 58% of firms believing there will be enough people to fill low-skilled jobs. Businesses view digital knowledge as the skill most lacking among their current workforce (32%), followed by engineering and construction (22%) and financial skills (14%).