London Business Optimistic But Tax Fears Persist

by Robert Lee, Tax-News.com, London

06 July 2010

A poll conducted by the CBI and KPMG has revealed that London businesses are more upbeat about their prospects for the future, despite the impact the recession has had on the country. 53% of those businesses polled were more optimistic about their future prospects and 58% of companies planned to expand their businesses during the next 12 months.

Some concern was expressed about the impact that the new 50p rate of income tax might have, with 57% of businesses believing it could stop businesses from using London as a base, or even staying in the UK. A high percentage (78%) believes that the cost of doing business in London is high and is a potential weakness.

There is also concern about skill shortages in the capital, with 44% stating that they could not find enough skilled staff. The quality of London’s transport system was also criticised, with 85% of companies saying that the system was unreliable and is affecting their ability to do business.

Nigel Bourne, Director of CBI London, said:

"There is a growing sense of optimism among London’s businesses, with firms more upbeat about the coming six months. Even though most companies rate the capital as a good or very good place to do business, the cost of operating a business in London, the level of taxation and the transport system are all seen as denting its ability to compete on the world stage. After a second year in office, businesses think the Mayor is making a positive impact on people’s perception of the city, and on its transport network. But neither he nor the government should be complacent. We must continue investing in London’s vital infrastructure and ensure it can compete with other cities globally. Nurturing home-grown talent is also going to be important during the recovery."

Richard Reid, London Chairman of KPMG, said:

"With over half of the capital’s businesses planning to expand and increase spending in the second half of this year it is clear that London will continue to be the driver of economic growth in the UK. The Government needs to continue to work with the private sector to ensure that much-needed investment projects such as Crossrail happen and that we don't slip behind other global centres. London is now in competition with the fast-growing economies of the Far East, which devote more of their GDP to infrastructure investment than any other region in the world. How we approach the problems of an ageing transport network in London will determine our future attractiveness and competitiveness."

125 businesses took part in the joint CBI/KPMG survey, which is conducted twice per year.

Recommended