Due to a range of disparate factors, the way the country – and, indeed, the world – conducts business is likely to change more in the next two or three years than it has in decades. Inevitably, London businesses will serve as both the focus of this rapid evolution and a yardstick for how this change is measured for a long time to come. In the short term, though, the public’s opinion holds the key to predicting the country’s economic future.
Lack of faith
The Lloyds Bank Business Barometer suggests that a recent surge of optimism in London’s economic fortunes has already come to an end. Confidence in local business fell from 32% in April 2021 to 24% by the end of May this year. Nationally, that figure looks more like 37%. Reduced employment and hiring prospects, as well as low operating capacity in the capital, are behind the public’s lack of faith in London’s economy.
It’s not all bad news, however. The City of London still has the highest proportion of people employed in highly skilled jobs anywhere in the UK, with 79% of workers occupying some sort of professional position. The number of skilled personnel working locally is dramatically higher than in places like Manchester, Birmingham, or Leeds, whose contingent of highly skilled people is just 49% of the population.
Oddly enough, one of the reasons to be cheerful about London’s economic future involves the internet. The popularity of e-commerce continued to grow throughout 2020 and early 2021 and almost half of the respondents to a Hug London survey claimed to have done more online shopping than ever before in recent months. As almost all businesses in the capital are small, largely internet-based ones, this shift in shopping attitudes can only be a positive one.
Of course, this is just the latest phase of a trend that’s been happening for some time. The traditional high street is closing, as warehouses and offices become the anointed champions of modern commerce. However, this reduction in brick-and-mortar establishments extends to other sectors too, such as banking, information services, and entertainment businesses like bingo and casinos.
In the latter example, the website BonusFinder lists 102 casinos that have almost no physical presence at all – especially on the high street. Their review here of the LeoVegas website notes that the company has operations in Canada and UK, among other jurisdictions, despite being headquartered in Malta. It’s arguably a reduced need to set up a customer-facing establishment that allows for expansion into these other markets. After all, the internet is global by default.
London’s current economic woes are temporary. And, while businesses will continue to leave the capital to take advantage of lower rents and other benefits in cities north of the M25, the wealth of skills available in London and its popularity with overseas business makes it an attractive option for multinational enterprises, in particular. Expect the share of wealth to trickle downwards to small businesses over the next few decades, though.