London’s small businesses delivered a harsh verdict on the Chancellor’s faltering efforts to kick-start the recovery today, with just one in 10 claiming the economy has improved in the last six months.
The findings come in the latest London Business Monitor — the quarterly snapshot of the health of almost 250 small and medium-sized businesses produced exclusively for the Evening Standard by Western Union Business Solutions.
The warning emerged as Britain veers dangerously near a triple-dip recession in the slowest recovery for more than a century, although London is faring better than the rest of the country.
It found just 10% of respondents thought the economy had improved during the past six months. More than two-thirds of firms, or 70%, see no light at the end of the tunnel for the UK business climate, and six in 10 harbour little hope of an export-led recovery over the next year,
Although a majority of the capital’s firms are confident of boosting their international business over the next year, a quarter of companies are still struggling to access credit and two-thirds are sceptical of the Coalition’s plans for a new business bank.
Jonathan Rees, WUBS’ UK regional director, said London’s businesses were weathering the economic storm “with fortitude”, but added: “A volatile first quarter has given reasons for both optimism and concern.”
A weak pound also tops the worry list for 65% of companies in the capital, up from less than one in five during January. The worries come against the backdrop of a turbulent three months for sterling, which is down more than 6% against the dollar and over 4% against the euro so far in 2013 despite stabilising in recent weeks.
The pound lost ground sharply earlier this year as apparently successful efforts to stabilise the eurozone prompted a sterling sell-off, although inconclusive Italian elections and a Cyprus bailout have added to uncertainty. A third of businesses are being hit by currency effects as import costs rise, although nearly half of firms are unfamiliar with potential ways to hedge the risk.
Rees added: “Many exporters are also importers and more must be done to help SMEs in the capital manage their international cash flow so the potential benefits from a weaker pound are not offset by equal or greater losses.”