Fewer London firms resort to redundancies

More London firms are hiring as normal and fewer are resorting to redundancies compared with six months ago,

The latest CBI / KPMG London Business Survey of 188 companies, half of which are SMEs, shows that 57% are now hiring as normal, compared with 45% six months ago. Fewer firms are making redundancies: 20% compared with 29% in the December survey.

Half (51%) of London companies are optimistic about their business prospects over the next six months, rising to 57% among smaller and medium sized firms (SMEs). However, this is tempered by uncertainty about the economy: 43% are more optimistic about the prospects for the economy than they were six months ago, while 31% feel about the same, and 26% are less optimistic.

The top three concerns over the next year are the threat of a double-dip recession, the tax regime and rising prices and inflation. Fewer companies are concerned about public spending cuts affecting their businesses: 52% say that the cuts will have at least a moderate impact, down from 71% six months ago.
Expansion plans remain strong, with 65% of businesses saying that they plan to expand over the next year, roughly the same as December (68%). Of those, 43% have plans to expand in London, up from a third on December, and 36% want to expand outside the UK.

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London firms are upbeat about the city’s competitiveness: 87% rate the capital as a good or very good place to do business compared with other global cities, and 78% believe London’s position in five years will be at least the same or will have improved.

Sara Parker, CBI London Regional Director, said:
“It’s great news to see that more London firms are hiring as normal and redundancies have fallen. Many businesses are planning to expand, but this optimism is clearly tempered by uncertainty about the economy.

“London is a great place to do business. Companies view the city’s talent pool, ease of access to global markets and proximity to clients as the capital’s biggest strengths, but high operating costs and the fragile transport system are seen as major weaknesses.