The London Chamber of Commerce and Industry (LCCI) insists there are opportunities for businesses to thrive in the capital despite a cut in the UK’s growth forecasts.
Business lobby group the British Chambers of Commerce (BCC) said GDP will increase by 1.1 per cent this year, lower than the 1.3 per cent it had expected. It also revised down its growth predictions for 2012 from 2.2 per cent to 2.1 per cent.
This is the third time this year that the BCC has lowered its forecast for 2011 after originally predicting it would grow by 1.9 per cent at the start of the year.
LCCI chief executive Colin Stanbridge said: “A slight downgrading of growth estimates is to be expected because even London’s businesses, the main drivers of the UK economy, have seen a tightening of conditions in recent months.
“Growth in the second quarter of the year was weaker than expected and inflation continues to rise, which adds to the continued pressure that business owners are facing,” he said.
However, Stanbridge did highlight some reasons why businesses in London could be positive despite the downgrade.
“That is not to say though that growth opportunities do not exist for the capital’s firms. Export markets in particular offer the best prospects for future growth and the chances of breaking into those markets will without doubt be increased by being based in a global city such as London,” he added.
The BCC has urged the government to cut red tape and improve the infrastructure to help businesses and rebalance the economy towards business investment and exports at a faster rate.
David Frost, the BCC director general, said: “The government is right to reduce the deficit but these measures must be matched by policies to stimulate growth.
“The rebalancing of the economy towards net exports and investment is not yet happening at an adequate pace.
“If we don’t get these policies right, we risk any recovery being weak and short lived.”
The BCC said more more could be put into the economy by relaxing laws that force banks to hold more capital, increasing lending as a result. Another round of quantitative easing could also be considered, the group suggested.
The recent weakening in the global economic recovery and slower-than-expected growth in the second quarter of 2011 led the BCC to cut its forecasts.
The National Institute of Economic and Social Research, the CBI and the Bank of England have all announced similar downgrades recently.