The headline confidence reading fell by 9 points, to reach -2 points in the first three months of 2024.
Business confidence amongst London small businesses turned negative in Q1 2024, following two quarters of positive confidence levels (10 in Q3 2023, and 7 in Q4 2023). When compared to a wider view, London’s confidence level in Q1 2024 is lower than the nationwide average of 5.
In London, the general economic conditions (58%), consumer demand (39%) and appropriately skilled staff (33%) are the greatest perceived barriers to growth over the next 12 months.
Investment intentions for London small businesses have risen slightly from Q4 2023 to Q1 2024, continuing to have a net positive outlook (9% in Q4, 14% in Q1). London’s investment outlook is just ahead of the UK average of net 10%. London is on par with The North East & Yorkshire and The Humber (also net 14%), and only behind the East Midlands (net 16%). For context, the region with the lowest investment intentions in Q1 is the South West (net 2%).
Q1 2024 sees a continued dip in headcount in London, with a net score of -8% in terms of staffing levels. 7% of small businesses increased their employment levels over the last three months, whilst 15% noted a decline. The contraction of employment levels at net -8% is a small dip from the net -5% score reported in Q4 2023. This follows a brief positive view in Q3 2023 (net 8%). London employment levels are below the nationwide average, with UK small businesses reporting a -4% contraction of headcount overall.
After securing a third term in office, FSB are urging the Mayor of London to create the conditions for a small business to be ‘FIT for the Future’.
FIT through fair Financing, supportive Infrastructure and the ability to Thrive over the next decade.
• Fair Financing is integral to the internal workings of a business, from receiving affordable, targeted access to various forms of finance, to simply getting paid on time. No small business should have to wait more than 30 days to be paid by any supplier through using their financial muscle.
• A focus on Infrastructure will underpin the operational working of London to support London’s small business community. The GLA should, where possible, create a version of ‘Help to Green’ – offering businesses a combination of audits and grants. These need to be easy to obtain and should provide support for small businesses to help them engage to become more energy efficient in their business and be an active player in improving London’s Air Quality.
• The tools for small businesses to Thrive in London will be crucial to alleviating current skills issues. In particular, the London business support hub (Grow London Local) must be fully functional and easy to navigate to enable small businesses to attract the skills needed. Helping small businesses with functional, digital, green, entrepreneurship alongside leadership and management skills for aspiring sole traders and micro business owners will boost the London economy.
Laura Timm, FSB London’s Policy Chair, said:
“Small businesses in the capital are demonstrating a little less optimism when compared to their UK counterparts. The high cost of doing business in London plays a huge part – particularly bricks and mortar costs.
“However, we are seeing positive signals in the access to finance arena with interest rates on commercial finance starting to reduce, according to FSB UK data. It is vitally important that the Bank of England look to bring down the Base Rate at the earliest possible opportunity to build on this positive trend.
“Challenges do of course remain, especially for hospitality firms, whose outlook is still some way behind the other major sectors.”