Tech and creative industries key to London growth
The technology and creative industries will drive London’s growth in the next five years, closely followed by professional and financial services, according to the latest CBI/KPMG London Business Survey.
Nearly two thirds of businesses – 69% for technology and creative industries, 65% for professional services and 62% for financial services – said these sectors would be key to London’s economic growth over the next half-decade.
More than half (58%) of the firms surveyed believe that east London – Canary Wharf, the Royal Docks and Stratford – will be vital to the city’s future economic growth, with 44% also rating the City, Shoreditch and Old Street as key engines of growth.
Optimism about the economy remains high at 65%, easing back slightly from last quarter’s record high of 70%. Half of the 128 respondents are optimistic about prospects for their own firms over the next six months, whilst 79% rate London as a good, or very good, place to do business.
Employers ranked retaining key staff and the need to deal with a lack of appropriately skilled job seekers as the biggest concerns over the next year. The majority of firms (52%) are increasing headcount, and only 15% are continuing with a recruitment freeze, down 3% on the previous quarter.
The cost of doing business in the capital also remains a concern. Housing costs were again highlighted as one of the biggest threats to competitiveness. Ahead of next year’s general election, businesses are closely monitoring issues around infrastructure investment (22%) and the tax environment (22%).
Lucy Haynes, CBI London director, said: “As the recovery gathers steam, it’s encouraging that London firms continue to be upbeat about the future and are looking to expand.
“The technology and creative industries have shot up the ladder as some of the fastest-growing sectors in London, with the majority of businesses seeing them as holding the key to the capital’s future growth.
“However, if we are to attract and retain the brightest and best minds, we urgently need to tackle the endemic housing problem the capital faces. Freeing up land and building more homes is critical to dealing with this. Businesses’ concerns regarding skills, the level of infrastructure investment and the corporate tax rate also need to be addressed to keep the capital competitive internationally.”
Richard Reid, London chairman of KPMG and the East London Business Alliance, added: “The technology and creative sectors in the capital are in rude health, and play a key role in the burgeoning recovery. There are some fantastic advocates in government and business for our buzzing start-up scene, but we need focused policies that help develop and encourage education in science, technology, engineering and maths subjects, and ease access to tech talent on a global basis.
“The success of our technology sector, like all other sectors in the capital, relies on the ability for businesses to have access to a skilled talent pool of staff. Earlier careers advice in schools, more focus on vocational training and schools working more closely with employers could all support economic recovery and growth in the longer-term.”
