London-based employers are expected to abandon widespread recruitment freezes over the next six months despite widespread uncertainty over the UK economy’s growth prospects.
According to the latest ‘London Business Survey’, which was undertaken among 91 businesses by employers lobby group the CBI and management consultancy KPMG, 45% of London companies are planning to start hiring as normal over the next six months compared with only 11% a year ago.
A mere 16% expect to continue with their recruitment freezes, down from 26% in 2009. Moreover, the number expecting to make redundancies over the next half year has fallen to 29% from 53% a year ago.
This was despite the fact that 34% felt pessimistic about the prospects for wider economic recovery, 45% were neutral and only 17% optimistic. Moreover, a huge 88% of those questioned said they were concerned that the uncertain environment was having an at least moderate impact on their business, which was leading to greater complexity in forecasting and planning (78%).
Some 69% said they were worried by the possibility of a double dip recession, while 55% were anxious about the impact of public sector budget cuts.
Nonetheless, employers did demonstrate cautious optimism about their own business prospects. Some 54% of respondents professed themselves to be in a positive frame of mind over the following six months, with just over two thirds planning to expand over the next year compared with 58% six months ago.
Sara Parker, the CBI’s London regional director, said: “London businesses are growing in confidence and most now plan to expand over the coming year. But this cautious optimism is tempered by the continuing economic uncertainty, particularly regarding the knock-on effects of public spending cuts, which is making future planning difficult.”
Employers also voiced specific concerns about the increasing burden of regulation that they faced, especially in regard to employment. As a result, the coalition government must work with businesses to find the right balance between maintaining essential legislation and cutting unnecessary red tape, she added.
The study likewise revealed that London’s biggest business strength was considered to be its wide skills base and talent pool (69%), followed by its access to markets (67%, up from 45% six months ago). Its primary weakness, however, related to the operating costs of doing business in the capital (67%), followed by the capital’s regulatory burden (63%).
But a lack of transferrable skills was believed to pose the greatest threat to London’s economy (56%), with 69% concerned that an immigration cap would have a negative impact on their ability to recruit personnel from overseas.
