Inflation is still the number one concern for London firms found the London Chamber of Commerce and
Industry (LCCI).
In its CAPITAL 500 London Quarterly Economic Survey, published on January 24 th, found that 66 per cent
of companies said they were more concerned about inflation in Q4 of 2023 than previous quarters,
while four in 10 (41 per cent) said interest rates were becoming more of a concern.
The increasing cost of goods and services, utilities, and labour costs were driving businesses’ concerns,
with 40 per cent of London firms saying they expected the prices of their goods and/or services to
increase in the next three months.
Similarly, 66 per cent of businesses said their energy costs had increased, and 53 per cent reported
higher fuel costs, in Q4 compared to the previous quarter.
The impact of this was most notable in the hospitality and retail sectors, with 120,000 jobs being lost in
the retail sector over the past year.
Despite cost pressures on businesses, there was a rise in business confidence in the final months of
2023, with 50 per cent of firms expecting their profitability to increase over the coming months.
Meanwhile, the number of companies who expect their turnover to increase over the next 12 months
rose from 43 per cent in Q3 to 48 per cent in Q4.
Businesses were also optimistic about the economy as a whole: 28 per cent of companies said they
thought the London economy would grow in the next 12 months (up three per cent from Q3). This
comes just days after the City of London Corporation announced that London had kept its place as
financial centre of the world.
But this is no reason to ‘get complacent’, advised Policy Chairman of the City of London Corporation,
Chris Hayward. “To revive our competitive edge and widen the gap with our competitors as the best in
class, we cannot ignore the areas in which we fall short. This means tackling our risk-averse culture,” he
stated.
Despite London retaining its position as the leading global financial centre, its competitiveness score fell
from 60 to 59 in 2023. Ahead of the Spring Budget announcement on March 6 th , Central London Alliance
urged the Treasury to correct this by reinstating the scheme allowing visitors to the UK to shop tax-free;
as well as reducing VAT for the hospitality sector, and freezing the business rates multiplier.
This could be instrumental in reviving the hospitality, travel, and retail sectors and boost London as the
catalyst for a revitalised economy for the whole of the UK.