Greater London | Small Business Index Q4, 2023

Local News 2 Feb 2024

FSB London call for support with three months to election day

With just over a month to go to the Spring Budget and exactly three months to go until Londoners go to the polls to elect their London Mayor – small businesses call for greater support.

The London Small Business Index (LSBI), which measures confidence amongst businesses, has fallen versus the previous quarter. However, it remains positive overall. Confidence stands at +7 as of Q4 2023. In Q3, it stood at +10.

Business confidence amongst London small businesses remains positive in Q4 2023, as the impact of rising costs may be continuing to ease in the region. When compared to other regions, London’s confidence level in Q4 2023 is significantly higher than the dampened nationwide average of -15.

In London, the general economic conditions (71%), tax burden (29%), alongside consumer demand and labour costs (both 26%) are the greatest perceived barriers to growth over the next 12 months.

FSB London are calling for a series of measures in the run up to the Budget and the Election:

For the Budget:

  • FSB recommends raising the VAT threshold from £85,000 to £100,000 and introduce a phased payment measure so that the tax burden can be lessened, and to support more businesses to grow.
  • The return of VAT-free shopping.  The Removal of VAT-free shopping for international tourists has sent the message to the world that London and the UK are not as business friendly as our competitors. The UK has missed out on a big chunk of the luxury tourism market since abolishing it. We urge the Treasury to reintroduce VAT-free shopping for all international tourists to boost growth.

For Mayoral candidates:

  • Make London a prompt payment zone. Late payments are causing headaches for two in three small businesses. FSB calls on the Greater London Authority (GLA) and the wider GLA family to set the ambitious target to pay 90% of undisputed and valid invoices from small businesses within 5 days, and 100% of all undisputed and valid invoices to be paid within 30 days. The Mayor should use the power of the office to leverage this target with all of the London boroughs
  • A Procurement system focussed on small businesses.  We must get to a target of one-third of all GLA procurement contracts going to small businesses and to encourage small businesses from within minoritised communities to bid for the first time – this should be a fundamental focus for the new ‘Grow London’ Portal
  • ‘Grow London’ to become the ‘one stop shop’ for skills. The London business support hub (Grow London) must be fully functional and easy to navigate to enable small businesses to attract the skills needed. Helping small businesses with Digital, Green, soft skills alongside leadership and management skills for aspiring sole traders and micro business owners.

FSB London Policy Chair, Laura Timm, said:

“As the race to enter City Hall hots up it is clear that the 1 million+ small businesses, who make up over 99% of businesses in the capital, must be front and centre in the minds of candidates. Supporting small firms to get paid on time, win public procurement contracts and access the skills they need will help meet the productivity challenges facing London businesses.

“Central Government must act swiftly too. We’d like to see small firms given a lift by an increased VAT threshold of at least £100,000, to make up some of the amount lost through years of a freeze which has dragged many across the £85,000 limit, and curtailed the growth of tens of thousands of other businesses.

“The fall in cost inflation – and the general downward trend in inflation since its peak in late 2022 – is certainly good news. However, with almost three-quarters of London businesses saying that ‘general economic conditions’ is the greatest perceived barrier to growth over the next twelve months, we urge the Bank of England to cut the base rate as soon as possible, minimising the economic damage caused.”

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