The chilling impact on the UK economy inflicted by the reimposition of Covid-19 restrictions has whacked business optimism in London, reveals a new study released today.
A sharp hit to consumer confidence from plan B measures to curb the spread of Omicron has weakened the trading environment for the capital’s businesses, leaving them sweating over the state of London’s economy, according to the London Chamber of Commerce and Industry (LCCI).
One in three London businesses expect the capital’s economy to weaken over the next year, up sharply from 21 per cent previously, research carried out by the LCCI found.
Brits were encouraged to slash socialising and work from home in December as the UK government re-imposed curbs on daily life amid soaring Covid-19 cases driven by the Omicron strain sweeping across the country.
However, plan B measures seemingly failed to notably reduce virus transmission, with cases consistently breaching record highs throughout December.
The measures cast a frost on the crucial Christmas trading period for the capital’s hospitality industry as consumers poured out of city centres and businesses in the Square Mile cancelled parties.
Nearly two in five London businesses expect the curbs to hit the wider UK economy.
Richard Burge, chief executive of the Industry (LCCI), said: “The severity of Omicron’s impact on London business and business leaders’ outlooks on the local and national economies.”
“Against the period of growing optimism witnessed in the third quarter, the results of this survey are a stark reminder of the tumultuous conditions businesses are trading in.”
The LCCI’s research illustrates the intense pressure the capital’s businesses are under to remain profitable amid a cost onslaught.
Energy bills at some 64 per cent of London businesses have swelled, while 45 per cent have experienced an uptick in raw materials costs.
Vicky Pryce, chief economic advisor to the Centre for Economics and Business Research, said: “Higher inflation, mainly due to a sharp rise in energy costs but also reflecting worsening staff shortages and supply chain issues, has been pushing up input costs.”