Business Survey December 2008

10th December 2008

Business confidence in South London firms has taken a nosedive compared with a year ago, although slightly more than half still anticipate turnover to increase.  These are the principal findings in the latest survey of firms undertaken by South London Business.

The results of the survey, carried out during October and analysed by statisticians at Brunel University, showed that while 23% of the firms said that their overall business confidence was higher than six months ago 37% said it was lower. This is a significant collapse in overall confidence as in the previous survey the percentages were almost reversed with 38% more confident and only 20% less confident. 

Over the last two and a half years expectations of customer demand had first of all jumped, and then tailed off completely. In mid 2006 the gap between those who expected demand for goods and services to increase and those who thought it would fall was a positive 14%, by last December the gap had grown to 25%. In the latest survey it had slumped to zero.
Despite the gloom, however, companies were planning positive steps to try and improve their economic prospects.  Over the next 12 months many were planning to increase market share, launch new products or services, or expand into new sectors or markets.

The survey was completed before the two most recent cuts in interest rates which, note the survey report’s authors, may cushion some of the worst effects of the recession.

Some 54% of companies that completed the business survey said they anticipated that turnover would still rise, as against only 11% that thought it would decline. This relative optimism is reflected in the responses to the prospects for employment growth over the next six months with nearly a third saying job prospects would go up, although 7% felt they would fall.
But the news is not particularly good for graduates. With more graduates entering the labour market businesses that either employed none or only a few were going to be faced with problems in how to use them. One out of every five businesses told the survey they did not need graduates despite the government aiming for about 50% of young people to go to university.
There is also a conflict between the aims of the government and the employment needs of businesses. Added to this is that only one in three firms felt that the graduates they had interviewed had been well prepared for the world of work.

Almost 300 firms completed the survey, with the largest proportions coming from the boroughs of Richmond, Croydon and Kingston. Next came Bromley and Merton, followed by Lambeth, Sutton, Wandsworth, Greenwich, Southwark and Lewisham.

Firms are located in South London for two main reasons – access to markets -mentioned by nearly two out of every four firms and quality of life, mentioned by 30%. South London as a business location appears to be a positive consideration for over three quarters of the firms with 78% reporting that they were very satisfied or satisfied with it. Only 6% were either dissatisfied or very dissatisfied. The cost of property and crime stand out as major negative issues for local firms.

More and more companies are seeking advice to help them adjust to the new economic conditions with many turning to banks and accountants, other business people and professional or trade associations. 
On the other hand many firms were prepared to participate in schemes to help their businesses. For instance Barclays was offering free seminars to help firms increase their customer base and profits and 40% of companies said they would be interested in attending; 42% said they would like to know more about the Train to Gain initiative and 24% said they would like more information on apprenticeships.

For South London Business, Chief Executive Peter Pledger said: “Firms locally are reflecting the views of business throughout the UK. We will be working hard to provide advice and practical guidance wherever possible to help them through these difficult times and to be ready to meet the upswing when it comes.”

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