London’s ‘record low confidence’ blamed on Labour workers’ rights bill
London is suffering from record low business confidence due to Labour government’s Employment Rights Bill, an industry group has warned.
The London Chamber of Commerce and Industry said it recorded the lowest ever level of business confidence in its quarterly economic survey of 500 business chiefs across the capital.
The group warned that the “punitive” workers’ rights reforms were making bosses think twice before hiring more staff.
The survey showed that just a quarter of London businesses believed the local economy would improve in 2026 while the number of firms expecting an improvement in the national economy was lower.
Over the last three months of 2025, one in four businesses looked to recruit more workers compared to just over a third of companies in the second quarter of the year.
Industry officials pointed the finger directly at the impacts of the Employment Rights Bill for the reported decline in London’s jobs market.
“Employment protections are vital but the balance of power has tipped too far the other way and employers are increasingly reluctant to hire as they face greater costs and risks,” Karim Fatehi, chief executive of the LCCI, said.
“There is no economic growth unless businesses have the stability and confidence they need to take risks, invest, hire and expand.”
Pressure on London mayor
London mayor Sadiq Khan this week suggested at a Mansion House speech that the jobs market was at threat from the rise of AI, with surveys conducted showing that more firms would look to integrate tools into work systems.
He said AI could be a “weapon of mass destruction” for white-collar jobs across the capital, particularly in business and financial services.
His explanation for a downturn in employment may not help swing voters back to Labour as worries about the future of the capital’s economic prospects set the stage for crunch elections across 32 boroughs in May.
Reform’s chief London campaigner Laila Cunningham has said results across hundreds of seats will be a verdict on voters’ opinions of mayor Khan.
The Labour government will meanwhile hope they do not suffer a heavy defeat in the capital, which has typically backed the party in elections.
Sweeping losses could pile pressure on Keir Starmer’s position as Labour leader, with mayors including Khan frequently clashing with the Prime Minister and government officials on issues such as Gaza, Ulez and taxation.