London bucks the gloom as firms expand

 
Tim Wallace
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STRONG sales growth and rising profits have boosted business confidence in London, a new study shows today, with the situation set to improve further over the next 12 months.

Average turnover rose 4.5 per cent and profits by 5.2 per cent, pushing the ICAEW/Grant Thornton confidence index to 13.3, a 26.5 point jump on the quarter.

Firms anticipate turnover will grow by 5.1 per cent in the next 12 months, with profits rising 4.9 per cent and sales volumes 4.5 per cent.

The export outlook is also strong, with 4.1 per cent growth forecast.

However, that optimism is only feeding through slowly into hiring – employment rose 0.1 per cent in the year to the second quarter, and salaries increased by 0.7 per cent, well below inflation and the lowest rise since the first quarter of 2011.

“The government needs to harness businesses’ increasing optimism about London’s economic future and turn it into sustainable, consistent growth,” said Ian Strange from the ICAEW.

“Of particular concern are the subdued employment growth expectations. Businesses anticipate an average 1.4 per cent increase in headcount over the coming 12 months, well below levels seen before the financial crisis.”