Housing and transport issues affect workforce planning, finds survey
London based employers are planning to expand their workforces outside the capital to beat the high operating costs and housing shortages, a survey has found.
More businesses in the capital (62 per cent) said they expect to grow in the next year compared with last December (53 per cent), however, this growth is planned outside London, the CBI/KPMG survey revealed.
Less than a third of organisations (29 per cent) now want to develop within London, compared with 54 per cent in December, while the proportion who plan to grow overseas has increased to 45 per cent up from 27 per cent in December.
The majority (92 per cent) of businesses rated the capital as a good or very good place to do business compared with other global cities. But, as in the previous two surveys, overall operating costs were cited as the main weakness. Housing was highlighted as the second most significant weakness, rising from third place in December, while transport ranked third. The location’s three strengths stayed the same as in the last survey: skills and talent pool; access to global markets; proximity to customers and clients.
In support of growth plans, the percentage of businesses which had frozen recruitment fell to 17 per cent, its lowest level in two years, down from 31 per cent in December and 51 per cent a year ago. But 68 per cent of firms are still only hiring where essential.
London companies also said they plan to spend relatively more on recruitment and training; product and process innovation; and IT plant and machinery, but less on land and buildings.
Sara Parker, CBI director London, said: “It’s encouraging that more London firms plan to expand but worrying that fewer expect to do so in the capital.
“Some of the perennial challenges of doing business in the capital, like high operating costs, housing shortages and transport challenges, threaten to undermine investment confidence. This is a wake-up call – we need to make sure that London does not lose ground to global rivals.”
Matt Lewis, London partner for KPMG’s National Market practice, said: “With London’s population expected to grow to 10 million by 2030, businesses need to be confident that the infrastructure, particularly rail and airport capacity, will improve. The cost and availability of housing also needs major attention, especially for smaller businesses which need to attract skilled individuals to what is increasingly becoming a very expensive city to live in.”
The CBI/KPMG London Business Survey is conducted quarterly to monitor London companies’ views on the capital as a place to do business. This survey was conducted between 17 April and 8 May 2013 with 138 businesses taking part.