London’s businesses have recovered optimism about future growth, despite a third revealing that staff have quit their jobs because living in the capital is just too expensive.
According to the CBI/CBRE London Business Survey, almost half of London’s companies, 47 per cent, are feeling more positive about the UK’s economic prospects in the next six months, reversing the steady decline seen since the first quarter of 2014.
It said 40 per cent of companies felt more positive about business prospects with the number of firms planning to expand solely in the capital, 50 per cent, at its highest level since 2012.
This is despite 57 per cent of firms citing housing costs and availability as negatively affecting abilities to recruit entry level staff – with almost a third of respondents stating that employees are actually having to leave their jobs and move because costs are too high.
Two thirds of businesses, 63 per cent, said there isn’t enough funding for affordable housing in London and over three quarters who do not believe that the target of building 42,000 new homes a year, set out in the London housing strategy, will be met.
Indeed, a need to build more homes and invest in the capital’s transport infrastructure turned out to be the business community’s top priorities for London’s next mayor.
Nearly four in five businesses highlighted improving the capital’s transport infrastructure and reducing congestion as the number one issue the new mayor must get down to tackling when they enter City Hall next year.
The survey respondents also called for better digital connectivity to support the growing creative and financial technology companies the city plays host to, a streamlined planning system to speed up infrastructure decision making and business rate reforms.
The biggest concern within their own businesses for leaders was retaining skilled employees followed by concern over the UK’s role in the EU. Over half of companies are continuing to increase headcount, although cutting costs is a top priority, with three in five firms only hiring where essential.
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Lucy Haynes, CBI London director, said: “The capital’s businesses are feeling upbeat about the economy, and the number of firms looking to expand in the capital is at a three year high. As a first class global city, London is alive and kicking to the changing demands of the twenty-first century. But relying on creaking infrastructure and failing to build enough homes for London’s workers is eating away at firms’ potential to grow and create jobs.”
She said that from “day one” the next mayor must improve transport and housing.
“Failing to do so will see talented, skilled workers overlooking the capital for other cities – ationally and internationally, to live and work – hampering the success of London’s businesses,” she said.
Adam Hetherington, central London managing director for CBRE UK, added: “If London doesn’t have the necessary infrastructure, vision and the planning freedom to make those visions a reality, its time in the sun as a global destination will be short-lived.
“World-class infrastructure, whether it be road networks or digital connectivity, are the foundations on which a growing city and thriving economy must be built. London has a unique draw for employers and employees; it’s down to all those that have a stake in the city, not least the new mayor, to ensure this remains the case.”
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