CONFIDENCE among London’s businesses has plummeted to its lowest level in two and a half years, according to a downbeat survey released this morning.
Targeted tax cuts are needed to help kick start economic expansion in London, the London Chamber of Commerce and Industry (LCCI) demanded.
Fewer than four in 10 (38 per cent) of the capital’s business leaders anticipate an improvement at their firms this year, the LCCI’s research revealed.
The figure, recorded at the end of last year, was down 11 per cent on the third quarter, and the least optimistic since the second quarter of 2009.
“The government could help by doubling the Annual Investment Allowance to £50,000 in the next tax year to encourage businesses to invest in their plant and equipment,” the group said.
Nearly two-thirds of the surveyed companies (65 per cent) are planning no investment in their plants or equipment this year. An even greater number (67 per cent) said they have no plans to increase their investment in training.
The LCCI also wants the government to expand its national insurance holiday for start-ups to include new firms in London and the south east.
The scheme, which has had a relatively low take-up, currently only applies to companies in other regions of the UK.
London firms are increasingly turning to foreign markets to offset falling domestic sales, the LCCI survey showed. The net balance on export sales came in at plus 10 per cent, while the same figure for the domestic market was three per cent into negative territory.
Worryingly for workers, nearly a quarter (22 per cent) of London firms said that their workforce had shrunk during the final three months of the year. Just 16 per cent said they had increased their headcount.
Fewer than one in six employers (15 per cent) expect to bolster their workforce in the first three months of this year.
“However, the vast majority (70 per cent) expect their workforce to stay the same,” the report added, “suggesting lack of confidence in the future is forcing many to put off employing new staff”.