With the Autumn Budget looming and fears of fresh tax rises mounting, new research from leading UK business advisory and accountancy firm Menzies reveals that Britain’s London City firms are facing an “agility crisis” that risks leaving the economy stuck in the slow lane.
Four in Five mid-large London firms (78%) say they are struggling to adapt to today’s volatile mix of rising costs, unpredictable policy shifts and rapid technological change.
Nearly one in five (19%) admit they have already missed out on a major business opportunity in the past year because they were too slow to act.
A further quarter 25% admit they’re too focused on responding to threats, rather than spotting new opportunities.
The Agile Advantage report, based on a broader Censuswide survey of more than 500 senior decision makers in mid-large sized businesses, 205 of which are based in Greater London, warns that too many UK firms are struggling to respond quickly enough to shifting economic and technological pressures.
Financial pressures top the list of threats to business agility, with 42% of City firms citing cash flow and budgeting difficulties, and 37% highlight inadequate systems and analytics.
Access to new funding is also undermining agility in businesses, where over 1 in 3 (36%) say a lack of government grants has slowed them down over the past two years, while others point to limited shareholder or director investment (35%), bank loans and credit facilities (30%), and venture capital funding (30%).
With the Autumn Budget on the horizon, businesses also point to gaps in government support as a blocker to agility: nearly two fifths (38%) say clearer rules and guidance from regulators would help them respond more effectively, a quarter (25%) say increased regulation presents the biggest threat to their business in the next 18 months, while 20% point rising trade protectionism, tariffs and trade disputes as being their biggest threat.
And London businesses have paused or scaled back investment in the following areas in the last 12 months: international expansion (30%), AI and digital transformation (24%), M&A or partnership deals (21%), and office and real estate footprints (20%).
But it’s not just about the money, as Menzies’ research shows that people related challenges make up eight of the top ten barriers that respondents believe are blocking agility. Almost a third are stalling senior strategic hires (27%), wider workforce recruitment is being scaled back for over a quarter (27%) of London firms, and just under a quarter (24%) are holding back training and development plans.
Leadership issues weigh heavily, as almost half (49%) of City firms feel ‘faster internal decision-making processes’, and two fifths (43%) feel ‘stronger leadership alignment on key priorities’ would make their business more agile. Further, a third (34%) say ‘poor communication and collaboration’ is hampering business agility from within – while a third (33%) point to a continued ‘focus on short-term goals’.
Simon Massey, Managing Partner at Menzies, said: “Right now, too many UK businesses are stuck in ‘wait and see’ mode – waiting for the Budget, waiting for the economy, waiting for international politics to settle. But as our research shows, the result is that too many are missing the opportunity to innovate and grow.”
Massey continued, “Businesses can’t control what’s going to be in Rachel Reeves’ red box, but they can control how resilient, agile and prepared they are for whatever may be around the corner. There’s no secret to business agility, but it’s near impossible if a business doesn’t have a clear destination and a direction of travel understood by every level in the organisation.”
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