According to a CBI/KPMG survey, two-thirds of London businesses plan to expand in the next year but fewer are planning to do so in the capital.
The London Business Survey showed that, while the capital was considered a good place to do business by the vast majority of organisations, high operating costs, transport challenges and housing shortages represented the biggest concerns for the questioned firms.
Since December, the number of London companies planning to expand in the city dropped from 53% to 29%. In the same period, the percentage of those that intend to expand overseas grew from 27% to 45%.
The three strengths stayed the same as in the last survey: skills and talent pool; access to global markets; proximity to customers and clients.
Sara Parker, CBI director London, said: “Some of the perennial challenges of doing business in the capital 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.”
Businesses’ level of nervousness about the eurozone crisis fell from first place in the December survey to fourth in this one, while their concern about the availability of credit dropped to tenth place from fourth during the same period.
While 40% of questioned businesses felt more positive about their performance prospects, concerns remain.
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.”