Low confidence among London businesses despite investment plans

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Small business owners based in London have reported a dramatic drop in confidence over the past three months, but 55 per cent are still planning to invest in their business over the next 12 months.

According to the latest London Small Business Index (LSBI) by the Federation of Small Businesses (FSB), small business confidence took a nosedive during the second quarter of 2022, entering into “reverse gear”.

In the first quarter of the year, the LSBI confidence level stood at a robust +43, but during the second quarter it fell to -14.

68 per cent of the business owners surveyed blamed the general economic conditions in the UK for their negative outlook. 32 per cent said their pessimism was due to a lack of appropriately skilled staff, while 25 per cent blamed lack of consumer demand and 29 per cent said foreign economies were the greatest barriers to growth over the coming 12 months.

However, more than half (55 per cent) of all businesses said they plan to grow either rapidly or moderately in the year ahead, while 25 per cent expect to increase investment in their business over the next three months.

Rowena Howie, FSB London policy chair, said that this highlights the need for more small business funding.

“The London Small Business Index has gone into reverse gear over the last quarter, and it is evident that external factors are playing a big part in this negative sentiment,” Howie said.

“The cost of doing business in London is increasing from all angles. From the costs of materials to the price of filling up the tank to paying sky high energy bills – and this is before we even factor in the cost of commercial space and employment tax rises.

“Firms desperately need help with the charges that hit them regardless of profitability: business rates, national insurance, utilities, fuel and those linked to supply chain disruption.

“At this time of economic and political upheaval we are looking to prime ministerial candidates for unequivocally pro-business, pro-growth commitments. There is still time to act, but time is of the essence.”

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