Optimism among London’s small firms has tumbled to its lowest level since the wake of the EU referendum amid unprecedented political and economic uncertainty, according to the latest Federation of Small Businesses (FSB) London Small Business Index (LSBI).
The LSBI stands at -16 in Q3 2017, down from +25 in Q2 and shows that 15 per cent of businesses have said that they intend to contract the business in the next twelve months (to downsize, sell or close the business) – compared to 13 per cent UK wide.
Whilst we are seeing less business looking to make capital investment in the next 12 months, the next quarter shows that employment intentions are up with a (+16) number of businesses are looking to increase headcount in the business rather than reduce the numbers. This must be tempered with the fact that labour costs are rising at the same time.
In the immediate short term, the Government should create an increased inner and outer London small business rate relief (SBRR) threshold that reflects the specific problems faced by small businesses in the capital.
Sue Terpilowski OBE, London Policy Chair, said: “London runs the risk of losing its ecosystem of micro and small businesses as the increases in the cost of doing business makes it less attractive to run a business in London. With higher business rates, less availability and affordability of commercial space, and higher employment costs – it is simply less profitable for small firms in London.
“London businesses also include a large proportion of those most affected by the recent business rates revaluation. Furthermore, the Government will use the Retail Price Index of 3.9 per cent to increase next year’s Bill when it should use the more widely accepted Consumer Price Index.
“We are urging the Chancellor to speed up a review of the Business Rates system that is causing severe hardship for tens of thousands of small firms in London.”