The first Small Business Index for 2018 in London has shown that while confidence in the Capital is still considerably higher than the UK average there is still a significant concern about the high costs of doing business.
There has been a rebound in confidence in London. Last quarter, confidence in the capital fell to its lowest level in almost six years.
However, the cost of doing business in the Capital is stifling business ambitions with 15% of businesses saying that they intend to contract the business in the next twelve months (to downsize, sell or close the business).
The FSB are calling on the Government to 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. See note to editors (3)
The main results for London were:
- 76% of businesses have seen an overall increase in the cost of running their business operations in the past quarter compared to 6% who have seen a decrease. This has worsened from the last quarter (+57). The main causes of these business costs include labour costs, utility costs and the exchange rate.
- 37% of businesses said that gross profits have increased in the past three months – compared to 43% who said there had been a decrease (so a -6% net balance).
- The employment picture amongst FSB members over the preceding three months showed that 12% had decreased staff numbers and 9% who had increased employment levels.
Sue Terpilowski OBE, London Policy Chair, Federation of Small Businesses, said:
“This fresh data for 2018 shows how resilient and optimistic small business owners in London continue to be – that goes with the territory of starting and running a business. However, we must recognise that for many small businesses the cost of doing business is weighing them down. These businesses are beginning to feel like boxers taking jab after jab whilst on the ropes.
“Cost pressures include the high cost of rail travel which are putting additional pressure on wages for London businesses, the higher cost of employing staff generally and the heavy burden of cripplingly high commercial space costs. With the business rates revaluation from last April impinging on the bottom line, national and local Government, along with the Mayor, must be on their side in 2018 to take businesses off the ropes and back fighting in the centre of the ring.”
Notes to Editors
- The headline SBI confidence figures are based on a weighted index, with the share of firms reporting ‘much improved’ or ‘much worse’ confidence allocated double weighting.
- FSB, ‘Small Business Index Q4 2017’, 5 January 2017. The FSB Small Business Index is the leading report focused on small business economic data. The SBI Q4 2017 survey was conducted in November 2017 and features responses from 1,084 members of the FSB Big Voice survey community and a fifth of those were in London. The report covers a range of economic indicators including: small business confidence, employment and wages, exports, productivity, spare capacity, finance and investment. The SBI is conducted by independent research company Verve.
- The FSB are calling on the Government to raise the rateable value at which small businesses pay no rates, known as small business rates relief (SBRR), from the current level of £12,000 to £20,000 in inner London and £15,000 in outer London. The latter is the nationwide threshold for SBRR eligibility in Scotland.