TECHNOLOGY AND CREATIVE INDUSTRIES will drive London’s growth in the next five years, closely followed by professional and financial services, according to CBI/KPMG’s latest London Business Survey.
Nearly two thirds of businesses said these sectors are crucial to London’s economic growth in the coming years. Over half said that East London, including Canary Wharf, the Royal Docks and Stratford, will be key to future economic growth. The City, Shoreditch and Old Street were also ranked as key engines of growth by 44%.
CBI London director, Lucy Haynes, said: “The technology and creative industries have shot up the ladder as some of the fastest-growing sectors in London, with the majority of businesses seeing them as holding the key to the capital’s future growth.”
Optimism regarding the economy is still high, despite a slight fall from last quarter’s record high of 70% to 65%. While 79% rate London as a good or very good place to do business, half of 128 respondents are optimistic about the prospects for their own firms over the next six months.
Despite this, employers ranked the lack of appropriately skilled job seekers and retaining key staff as the biggest concerns over the next year. Over half of firms are increasing headcount, with only 15% with a recruitment freeze, down from 18% in the last quarter.
London chairman of KPMG, Richard Reid, said: “The technology and creative sectors in the Capital are in rude health, and play a key role in the burgeoning recovery. There are some fantastic advocates in government and business for our buzzing start-up scene but we need focused policies that help develop and encourage education in STEM (science, technology, engineering and maths) subjects, and ease access to tech talent on a global basis.”
The cost of doing business in the capital is also a concern. Housing costs were again said to be one of the biggest threats to competitiveness. In preparation of next year’s General Election, a fifth of businesses are monitoring issues around infrastructure investment and the tax environment.
Haynes added: “If we are to attract and retain the brightest and best minds to Tech City and to the rest of London, we urgently need to tackle the endemic housing problem the capital faces. Freeing up land and building more homes is critical to dealing with this.”
The survey shows a majority of firms are focusing on doing business in the UK and Europe, with 65% planning to expand their business operations in the next 12 months, up 1% from last quarter. Much of the expansion is set to be domestically focused with 35% looking to expand in London and 32% in London and the UK, with 19% looking to expand internationally.
“Just as the investment made in East London as part of the 2012 Games is now paying dividends in attracting businesses large and small to this diverse part of the capital, investment in providing greater training for our young people now is vital for their future and the future health of the economy,” Reid said.
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