London firms more pessimistic about future prospects

Companies based in Greater London are more pessimistic about the economic outlook for their business compared to those in other UK regions, according to a new study.

Despite the widening economic gap between London and the rest of the UK, the research found that one in five businesses across the capital are pessimistic about their short-term future, according to market research firm B2B International.

This is surprisingly lower than those based in the North, which includes the North West, North East, the Midlands and Scotland, where over 90 per cent of businesses are optimistic about their economic outlook.

Those who stated their revenue had significantly decreased by 5 per cent or more in the past two years are considerably more likely to be positive about their business’s commercial future.

On average, companies across the UK have a very optimistic view in terms of their economic outlook – the research established that 90 per cent feel optimistic, with one in five very optimistic.

Manufacturing exhibits the highest commercial confidence out of all UK sectors, where 90% of companies are optimistic with approximately one in three very optimistic.

Conversely, the finance and economic sector is the most pessimistic, with one in five displaying a lack of confidence in their forthcoming prospects.

“With the capital’s economy set to expand by 15 per cent over the next five years, faster than any other region and accounting for almost a third of total UK growth over the period, the low business confidence here is surprising,” says Paul Hague, director at B2B International.

“We can explain the difference by understanding that companies that have struggled to grow in the economic downturn are more likely to be confident with the onset of recovery. Unlike many Northern regions, London’s economy has continued to prosper, and in turn companies here may be more reserved about their outlook, particularly with Eurozone growth grinding to a halt and the question mark over the UK’s EU membership.”

High confidence in the manufacturing sector is particularly interesting, he adds:

“Although British manufacturers have reported worse-than-expected growth in production and new orders for December 2014, the sector has continued an unbroken run of expansion which started in spring 2013 despite the Eurozone struggling – the biggest market for UK exports.”

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