Economic woes deflate City entrepreneurs

The latest pulse reading of London’s small businesses shows a slight drop in business confidence – thanks mainly to nervousness over the micro and macro economy.

Some 36 per cent of company directors expected to see an improvement in the capital's economic prospects over the next twelve months, compared to 18 per cent who expected them to worsen and 46 per cent who thought they would stay the same.

The balance - plus 18 per cent - is ten points down on the previous figure, which represented the first time in 2006 that the balance had been positive, says the London Chamber of Commerce, which produced the figures.

Unlike previous readings, the type of businesses showing themselves to be less confident was not easily identified, rather; the downbeat forecast was the consensus, the pollsters said.

Out of almost 150 company directors responding, an increasing number were also less confident in the UK economy as a whole – with just 23 per cent optimistic about economic growth.

Just 4 per cent of company directors said they expect to see an improvement in either interest rates or inflation over the next twelve months.

Despite the concern, most entrepreneurs believe their company will weather the economic storm.

Over 70 per cent of London-based company directors expect to see an increase in their venture’s turnover, while 61 per cent anticipated more profitability – both over the next 12 months.

Meanwhile figures for unemployment show a slight improvement in confidence, rising 5 points from -46 per cent since the first quarter, “but still remain very low,” the LCCI said.

Colin Stanbridge, chief executive of the LCCI, said: "It is worrying that business confidence should have fallen in this way. In particular, it is a warning to the government of the current fragility of the London economy which could prove a threat to the health of the UK economy.”


4th August 2006

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