Here’s a heretical thought: The UK economy is storming back to prosperity. In fact, if things carry on we’ll be back to 3 per cent growth pretty soon and all indicators will be pointing in the right direction. Even today things are pretty damn good.

Absurd? Well, most voters will tell you it is – the GfK index of consumer confidence in the economy over the next 12 months is at minus 30, indicative of mass national pessimism. Nationwide’s barometer of public confidence is low and falling.

Yet the data tells a different story, one of growth, job creation and low inflation. We really could be on the brink of a spectacular revival.

So if you want to start humming Rule Britannia and telling cynics that this sceptred isle is on its way back then are here are 12 cast-iron reasons you can reel off.

1 The economy is set to grow

The Office for Budget Responsibility, which provides the independent forecasts for the government, is forecasting real terms growth of 2 per cent next year, then 2.7 per cent and 3 per cent in 2015. Even this year growth will be 0.8 per cent.

2 Exports are up

Exports grew strongly in 2011, and hit a record high in October. Exports to BRIC nations are up 150 per cent in five years. (Read the latest BRIC countries news and business advice.) Exports to the Eurozone nations grew 11.3 per cent last year despite the ongoing crisis. There is a large number of high-perfoming sectors: for example, livestock exports are up 22 per cent on 2010, with the Far East being the fastest growing market.

3 We have the Pound…

…and not the Euro.

4 Jobs market is improving

Since December 2009 private sector employment has risen by 650,000 jobs – more than offsetting the net layoffs in public sector employment of 365,000. And what are the prospects for future hirings? Actually, a string of surveys suggests the rate of hiring is improving. The Federation of Small Businesses says there is a net balance of 1.2 per cent of small firms looking to hire. Looking long term the OBR forecasts employment rising steadily from 29.1m this year to 30m in 2016.

5 Savings ratio is back on track

In order to “detoxify” the economy it is necessary to recapitalise the banks and to reduce the appalling borrowing levels of consumers. This requires an increase in the savings ratio – the percentage of household income saved by consumers. During the 2000s the ratio was 4.3 per cent, indicative of the spend-and-borrow ethos of the Blair-Brown era. By comparison, the ratio during the eighties and nineties was 8.9 per cent.

At the start of the financial crisis in 2008 the ratio was a dreadful 1.7 per cent. Since then the rate has rallied. In the last quarter of 2011 the savings ratio was 7.7 per cent, a slight fall on the previous quarter, but undeniably in the right ballpark. Vicky Redwood of Capital Economics said: “Although the household saving rate nudged down in Q4, the back-data have been revised up a fair bit. So it now looks like households’ finances are in a bit better condition than before.” The detox is well underway.

6 We are in the right sectors

Ignore much of the blather about needing to “rebalance” the UK economy. It is, in fact, highly diverse with specialisms in precisely the right areas: pharmaceuticals, defence, nanotech, financial services, oil & gas, computer chips, hi-fi, computer games and mining. Our agriculture sector is world-class, and devoid of the terrible CAP-related problems facing Poland, France or Ireland. Our motorsport industry is larger than that of France, Germany and Italy put together.

 

7 Services sector is recovering fast

The Purchasing Managers Index, which reflects the health of the services sector, rose from 53 in February to 55.3 in March. Any number above 50 indicates growth. Chris Williamson, chief economist at Markit which compiles the PMI, said the data suggests the UK economy grew by 0.5 per cent in the first quarter, contradicting fears we slipped back into recession.

8 Public sector borrowing is falling

The biggest challenge of this parliament is to cut the difference between tax revenue and state spending. In 2011-12 the government borrowed £137bn to cover the shortfall. By 2016-17 this will have fallen to £21bn according to the OBR, or 1.1 per cent of GDP.

9 Inflation is low, and falling

In 2011 the Consumer Price Index hit 4.5 per cent. Cue panic! But this figure was partly due to high commodity prices and the VAT rise. The CPI is forecast to fall to 2.8 per cent this year and then stay at 2 per cent for the next few years – the ideal scenario.

10 Government borrowing is absurdly cheap

When Labour left office lenders were asking 4 per cent to lend to the UK government. Now the effective rate of interest on 10-year gilts is a shade over 2 per cent. This matters. The two percentage point fall equates to a saving of £43.2bn over the next five years.

11 The size of the state is shrinking

When the state gets too big it squeezes out the private sector, causing economic stagnation. In the noughties the government grew 53 per cent in real terms – the biggest expansion by a developed economy excluding war and socialist revolution. In Northern Ireland and Wales public spending reached more than 70 per cent of GDP, and 64 per cent in the under-performing North-East. Now the bloatage is deflating. The government will decline from 48.4 per cent of GDP in 2011 to 39 per cent in 2016-17. Still some way short of Hong Kong’s 17 per cent. But a welcome start.

12 Brits love entrepreneurs

While the French are wondering whether to vote for a guy who wants a 75 per cent top rate of tax (Francois Hollande, currently bookies’ favourite) or his rival who wants a 100 per cent rate (Jean-Luc Mélenchon, admittedly an outsider), the UK has cut the top rate and offers a raft of incentives to start-ups. Our universities are hot-beds of ambition. And we have the strongest investment environment of any European nation, ranking #1 for private equity by a considerable distance. Overall, the World Bank ranks the UK as the easiest place in the world to borrow money. Together, entrepreneurs and finance are the most powerful engine economic prosperity. And on both counts Britain is up there with the very, very best.

 Source:   www.londonlovesbusiness.com

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

Permanent placements increase further but temp billings decline
Recruitment consultants reported a rise in permanent staff placements for the third month in succession during March, albeit at a slower pace than February’s nine-month high. In contrast, agencies’ temporary/contract staff billings decreased. Although moderate, it was the fastest drop in short-term appointments for over two-and-a-half years. Panel members frequently indicated that employers had chosen to convert temp workers into permanent employees due to the effect of Agency Worker Regulations.

Vacancies rise at faster pace
Overall demand for staff strengthened in March, as the number of vacancies available to jobseekers rose at the fastest pace since July 2011. The pick-up in growth was driven by a stronger increase in permanent job vacancies, which offset a slower rise in the number of available short-term roles.

Slowdown in candidate availability
Growth of permanent staff availability eased further in March to near-stagnation. Temporary/contract staff availability meanwhile rose at the weakest rate since August 2011.

Permanent salaries flat
Starting salaries awarded to permanent hires were broadly unchanged in March, following a modest decline in February. Temporary/contract staff pay rose modestly, with some panellists highlighting the inflationary impact of Agency Worker Regulations.

Ronnie McCombe, partner at KPMG, comments: “It’s encouraging to see permanent placements in positive territory for the third month in a row in 2012, albeit slightly down on last month’s high. This provides further hope that the employment market will win through to a stronger recovery as the year progresses. Sectors such as IT & Computing and Engineering/Construction continue to perform well. However, it is certainly still too early to call a jobs recovery. There remain real tensions beneath the surface. Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them. And while it is heartening to see that overall vacancies are rising, salaries are stagnating meaning the economy is likely to carry on feeling the pinch from cost conscious consumers reluctant to part with their money.

“There are grounds for cautious optimism but recovery remains fragile and could all too easily be blown off course.”

Source:  www.top-consultant.com

 

The UK labour market is heading in the right direction, according to the latest Reed Job Index. Vacancies increased by 9% in the first quarter of 2012, compared with the same period last year, whilst there was a 6% increase between Q4 2011 and Q1 2012. This rise in job vacancies suggests the UK economy may be well placed to avoid a double dip recession.

The Reed Job Index report is a leading provider of up-to-the-minute insight into the conditions and trends in the UK labour market and is based on data collected from over 10,000 UK companies advertising on reed.co.uk. The report tracks the number of new jobs and salaries on offer each month against a baseline of 100 set in December 2009. The monthly report analyses data across 37 industry sectors and 12 UK regions and is a leading indicator for future economic growth.

The engineering sector registered another robust, job-creating performance after reaching its highest level in March 2012 since the index was set in December 2009. Other employment sectors driving this growth include IT, construction, motoring and purchasing.

The East Midlands was the UK’s leading region by measure of year-on-year growth, while Scotland and Northern Ireland were the only areas to report a decline in employer demand compared with February.

Commenting on the figures, Martin Warnes, Managing Director of reed.co.uk said: “The latest Reed Job Index shows that job creation has been strong during the first three months of the year. It represents a strong improvement on the same period last year and supports the growing confidence in the UK’s economic recovery which was expressed this week by both the PMI and the British Chambers of Commerce.

“Employers in technical and manufacturing sectors are driving this recovery and are taking on more staff now compared to a year ago. Led by an upbeat engineering sector, these industries are showing intent to plan sustainable futures by increasing staff. A boost to the number of new construction jobs available also gives hope that a sustained economic recovery is on the cards.

“But we mustn’t forget that, for a lot of people, finding work continues to be a real struggle, whilst the cost to business of employing staff remains a barrier to recruitment. The budget may have been seen as friendly to business, but the taxation burden of actually employing staff remains high which needs to be addressed by policy makers to assist continued job growth and a sustained job-led recovery.”

Source:  www.top-consultant.com

 

The volume of business in the financial services sector grew for the eighth quarter running, at well above the average pace, in the three months to March, according to the latest CBI/PwC Financial Services Survey.

This growth is reflected in the first rise in optimism among financial services firms (+32%) in a year and an unexpected increase in employment in the sector (a balance of +19%). Companies also plan to invest more in IT over the next year.

Of the 95 financial firms that responded, 44% saw volumes rise in the quarter to March, and 21% reported a fall. The resulting balance of +23% was well above the long-run average (+12%) and driven primarily by business with private individuals. In the coming quarter, companies expect growth to accelerate somewhat (+34%), again mostly coming from business with individuals.

The rise in incomes was driven by fee, commission, or premiums (+13%), with the value of net interest, investment or trading remaining flat (+3). Meanwhile, average spreads widened further this quarter (+11%), building on already solid growth in the previous quarter (+43%).

The growth in income more than offset the impact of the sharp increase in total costs, allowing profitability to rise more rapidly than in the previous three quarters (+21%).

Numbers employed in the financial services sector rose unexpectedly (a balance of +19% compared with an expectation of -18%). A similar increase is expected in the next quarter (+20%).

Financial services firms resumed investment in both marketing (+16%) and information technology (+47%) in the three months to March, after a slack period last quarter. Spending intentions for IT were the strongest in a year, as financial services companies looked to increase efficiency.

As has been the case over the last year, companies continue to cite uncertainty about demand (+55%) and inadequate net return (+46%) as the factors most likely to limit capital expenditure over the next twelve months. The number of firms highlighting the shortage of labour as a significant constraint increased this quarter (+35%).

Level of demand (75%) and competition (52%) continued to be the two most significant factors likely to constrain business expansion in the coming twelve months.

Ian McCafferty, CBI Chief Economic Adviser, said: “Financial services sales volumes and income continued to rise this quarter, putting the sector’s recovery on a firmer footing.

“Optimism levels and business investment intentions have also improved, in contrast to last quarter as some of the worst risks around the euro area crisis have eased.

“The unexpected rise in employment is a further encouraging sign for the sector. But with the current level of business regarded as below normal, conditions still remain challenging for financial firms.”

Analysis by sector

Banking
Banks reported a notable rise in optimism, with business volumes expanding for a second consecutive quarter, and a similar rate of growth expected in the three months ahead. However, total costs rose sharply over the past three months. Despite growth in business volumes and income values, the rise in costs prevented any growth in profitability. Numbers employed rose unexpectedly and firms expect to add to headcount further in the next quarter. Banks plans for expenditure on IT are higher than average. Statutory legislation and regulation is widely cited as an investment motive.

Building societies
Building societies were considerably more optimistic about their overall business situation compared to the last quarter. Business volumes grew at the fastest pace since June 2011 this quarter, despite predictions that volumes would remain broadly flat. However, the level of business was seen as below normal. The volume of business is predicted to be broadly flat in the coming quarter. Building societies plan to increase IT expenditure in the coming year, with increasing efficiency/speed, replacement, and statutory legislation and regulation given as the main reasons.

Finance houses
Optimism amongfinance houses increased over the last three months. Business volumes fell strongly over the last quarter, and finance houses reported the level of business as below normal. However, a solid rise in volumes is expected next quarter. Numbers employed fell in the three months to March and headcount is set to fall further over the next quarter. Expenditure on IT is set to increase in the year ahead relative to the past 12 months. Increasing efficiency/speed and replacement were the main reasons given, followed by reaching new customers.

Kevin Burrowes, UK Financial Services Leader at PwC said: “More positive economic data and a slightly more stable environment in the eurozone mean that banks are much more confident about their sector. This confidence is translating into recruitment with many banks reporting that they plan to increase headcount over the coming months. Banks are also planning to invest in their businesses, particularly in their digital offerings, and customers should reap the rewards of this.

“The picture is not so rosy for building societies which, while displaying more confidence than in the last quarter, are still concerned about asset quality and the impact of the regulatory burden. However, the relatively high level of home loan approvals in December and less turmoil in the eurozone mean that confidence among building societies is higher than in the last quarter.

“There are still choppy waters to be navigated and, as ever, stringent cost and risk management will be key.”

Life insurance
Business volumes increased for a ninth consecutive quarter, with further growth expected in the next three months. Income expanded modestly, but stronger rates of growth are forecast. Life insurers reported an unexpected rise in profitability and optimism about the business situation rose marginally. There was a rise in headcount and a further increase is expected. Investment intentions are reported to be above average.

General insurance
Optimism amongst general insurers rose very modestly over the three months to March. Business volumes expanded slightly for the second consecutive quarter, although more slowly than expected, and growth is expected to accelerate over the next quarter. Profitability rose strongly over the past three months and is expected to rise robustly in the next quarter. Average commissions, fees and premiums paid rose at their fastest rate since December 2010 and are expected to rise at a similar pace next quarter.

Insurance brokers
Optimism amongst insurance brokers rose in the three months to March. Business volumes fell for the third consecutive quarter albeit at a slower pace than in the previous two quarters. However, volumes are expected to grow strongly in the three months to June. Overall profitability rose for the first time in a year, albeit modestly, and is expected to rise again next quarter at a slightly faster pace. Insurance brokers are planning to spend more on IT in the year ahead, driven by a need to increase efficiency/speed and by replacement.

Mark Stephen, UK Insurance Leader at PwC, said: “There are a number of reasons for general insurers to be feeling positive as business levels are growing, price increases are starting to come through and claims growth is slowing at last. This positive backdrop has given insurers the confidence to start hiring again – a welcome reversal after two quarters of headcount reductions. However, the commercial sector is an area of concern as business has fallen to disappointing levels.

“Strong rises in customer demand and levels of new business has finally ended life insurers’ run of pessimism. This positive backdrop is allowing life insurers to invest heavily in IT, marketing and performance measurement to ensure they are well placed to respond to the upcoming retail distribution review and the challenges it will bring. Life insurers are also looking to boost staff numbers, although there are concerns over the availability of professional staff due to the range of investment and regulatory projects companies are tackling.”

Investment management
Business volumes rose strongly over the past three months, defying expectations of a small decline. Volumes are expected to rise at an even faster pace in the quarter ahead. Investment managers were significantly more optimistic about the business situation than they were three months ago, and profitability rose at its strongest in a year. Firms’ plans for expenditure on IT are now well above their long run average, although the proportion of firms citing uncertainty about demand as a constraint on investment is the highest since September 2009.

Securities trading
Business volumes in securities trading declined in the three months to March, and a further fall is expected next quarter. Income fell, defying expectations of growth. Profitability declined for the fourth successive quarter, despite a fall in total operating costs, as shrinking business volumes drove up average costs. Numbers employed dropped after nine consecutive quarters of growth and headcount is expected to fall again next quarter. The level of demand and competition are the main factors likely to inhibit business expansion over the next year. Overall, investment is expected to be broadly flat over the coming year, although a slight rise in IT expenditure is planned.

Pars Purewal, UK Investment Management Leader at PwC, said: “Investment managers have shown much more confidence in their sector compared with recent quarters. Growth in investment management is expected although continued cost reduction programmes across the sector mean that further headcount reductions are likely. Investment managers also need to look to the regulatory changes on the horizon and factor these into their plans and business models.

“Falling levels of business and higher costs per transaction mean that security traders have reported very downbeat predictions in the sector. The long-term outlook is negative among traders and concern about the impact of upcoming regulatory changes could depress this even further. It therefore seems likely that further job losses are inevitable.”

Source:  www.top-consultant.com

 

UK permanent placements growth at nine-month high in February

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

Divergent trends in permanent and temporary appointments
Growth of permanent staff placements was recorded for the second month running in February, and at the strongest pace since last May. Agencies’ temporary/contract staff billings, however, fell slightly for the third month running.

Stronger increase in vacancies
Overall demand for staff rose at the fastest pace in four months during February, as a sharper increase in permanent vacancies offset a slower expansion of temp vacancies. Sector data showed that IT & Computing was the most in-demand permanent staff type, while Engineering/Construction was the most sought-after temp category.

Slower rise in staff availability
The availability of candidates to fill job vacancies rose further in February, albeit at a weaker pace. For both permanent and temporary staff, rates of growth were the slowest in three months.

Fall in permanent salaries
Recruitment consultants reported a drop in permanent staff salaries during February for the first time since October 2009. In contrast, temp staff pay rates increased at the fastest pace in four months.

Bernard Brown, Partner and Head of Business Services at KPMG comments: “The latest report raises hopes of a Spring revival in the jobs market with a second successive monthly rise in the number of people securing permanent roles and the data also indicating that February saw the rate of growth accelerating to a nine-month high. Put alongside recent news from the ONS which suggested that the last unemployment figures represented the smallest rise in almost a year and there may be signs that the market is displaying early signs of recovery.

“Yet cautious optimism must remain the watchwords because the picture is not as rosy for temporary positions. Of course, the reduction in contract placements may yet be related to the Agency Workers regulations, but without buoyancy in both the permanent and temporary markets it is still too early to unfurl the bunting.

“For those who have found new employment, we are also seeing rates for wages reducing for the first time since 2009, with a real prospect of continued downward pressure as the year goes on. Given the ongoing squeeze many are feeling as costs go up on the high street, it appears that the price of permanent employment is lower take-home pay, but this is an inevitable consequence of a competitive, yet still fractious, market.”

Kevin Green, Chief Executive of the Recruitment & Employment Confederation, says: “The labour market is clearly improving as this month’s Report on Jobs shows the strongest performance on permanent placements for nine months. Demand for staff also rose at the fastest pace for four months, so jobseekers should take heart that there are vacancies out there. Slowly, private sector employers are becoming more confident as the gloom, caused by a slowing economy late last year and fears about the Eurozone, recedes.

“The temporary market has shown a slight decline since January and is essentially flat at present. However, agency work continues to provide an important outlet for employers and jobseekers with over a million temporary workers placed on assignments in any given week.

“We are seeing high demand in professional roles such as IT, engineering, legal and HR and chefs continue to be in demand within the hospitality sector. The other sector which seems buoyant is nursing, medical and care. We believe this is because NHS trusts are recognising that using high quality temporary staff when they are needed is a cost effective solution to maintaining a quality service when budgets are being squeezed.

“Looking ahead, we anticipate that unemployment will continue to worsen slightly over the next few months. However, with these early indicators of the private sector starting to hire again, the labour market is likely to bounce back towards the end of this year and on into early 2013.”

Source:   www.top-consultant.com

New job opportunities across the UK have bucked the gloomy economic news and risen to their highest level for nearly two years, according to the Reed Job Index for November which stands at 133. Employer demand for new staff is a third higher than it was 23 months ago, and 20 per cent higher than the same time last year.

This builds on the growth in employer demand seen in October’s Index, and shows new job opportunities at their highest level since the Reed Job Index was started in December 2009. November’s Reed Job Index standing of 133 is 4 index points (3 per cent) up from October.

Growth in new jobs has been led by London, the South East and the North West, and has risen in more than half of the UK areas analysed by the Index. However growth hasn’t been uniform, and 5 out of the 12 areas – including Wales, the North East of England and Scotland – show falls in employer demand this month.

At the same time, increased employer demand has spread right across a wide variety of private sector jobs, led by technical roles such as engineering and IT alongside service sector roles such as accountancy, leisure and tourism. In contrast, public sector recruitment has fallen back 6 points (5 per cent) in November compared to October, to give a subdued Reed Public Sector Job Index level of 60 Index points.

The Reed Job Index is compiled by job site reed.co.uk through analysis of job advertisement trends from over 9,000 recruiters throughout the UK tracked against a baseline which was set at 100 in December 2009.

James Reed, Chairman of reed.co.uk’s parent company Reed Global, comments on the Reed Job Index for November: “The latest Reed Job Index shows that confidence about the future has continued to increase right across the private sector, in spite of last week’s gloomy economic pronouncements. Not only is employer demand up by twenty per cent year on year, newly available private sector jobs are at their highest level since the dark days which followed the last banking crisis. There are even signs that the British economy is re-balancing towards the industrial sector, with demand for technical staff such as engineering and IT specialists 90 per cent higher now than when our Index began 23 months ago.

“Caution remains, with salaries for new jobs staying low, and growth more patchy outside the regional powerhouses of London, the South East and North West. Only fools forecast, and increasing turmoil in the Eurozone makes us all wary of plotting a clear path forwards. At the same time the Reed Job Index has proved to be a reliable leading economic indicator, and certainly demonstrates that the underlying appetite for growth across the private sector is at a higher level than some commentators believe.”

Source:  www.top-consultant.com

 

KPMG’s latest Business Outlook survey offers a small crumb of optimism for business in the UK. Across the manufacturing and services sectors it indicates some level of confidence – but this is tempered by comparisons to the business outlook six months ago.

According to the data, a significant minority of manufacturers expect activity to rise over the coming year. However, the balance of positive sentiment – at 31 percent – has almost halved from 59 percent in June, this year.

One in three manufacturers (34 percent) also anticipate an increase new orders over the next 12 months. Although an encouraging sign, the figure reflects a fall as it has dropped from 58 percent, 6 months ago.

Reflecting the cautious optimism further, just 5 percent believe employment prospects will increase. It represents a dramatic fall from the same time, last year, (23 per cent) and is in line with wider predictions about the state of the job market (KPMG/REC Employment surveys).

KPMG’s data also shows similar results in the service sector across the UK, with the same proportion (33 percent) optimistic that both current levels of activity and new business will increase between now and winter 2012.

Service companies are also suggesting that cash flow will continue to be an issue. Although 1 in 5 (21 per cent) claim they will be able to increase price points, the profit margin is likely to decline, with 46 percent anticipating a rise in costs.

When it comes to levels of employment in the service sector, the figures look better at 10 percent. Yet, in line with the weaker expectations for activity growth, the rate of job creation predicted is the lowest since June 2010.

Commenting on the latest figures, Malcolm Edge, KPMG’s UK Head of National Markets, said: “Even though both the UK manufacturing and services sectors are anticipating growth across most key indicators, expectations are modest at best. Clearly, the UK manufacturing sector is continuing to feel the repercussions of what seems like an interminable series of supply chain interruptions – natural disasters in Japan, floods in Thailand, political turmoil in North Africa, debt crisis in Europe – it is a very complicated world for UK manufacturers today.

“Thankfully, the UK service sector seems to be somewhat optimistic about business activity over the next year. But on closer inspection, it becomes clear that cost inflation is expected to stay high, revenue growth is anticipated to level out, and capital expenditure is set to decrease for the first time in four surveys. None of these are strong signs for sustained growth in the long-term.”

The survey goes on to explore business optimism across the globe. Key findings include:

• Europe witnessing the most dramatic drop in confidence, with business sentiment hit strongly by the region’s ongoing debt turmoil

• gloom spreading across the globe, impacting both developed and emerging economies alike

• Concerns about the knock-on effects from Europe, combined with a continuing softness in global economic conditions, have also taken a toll on growth expectations in the emerging markets. BRIC area companies signalled a drop in optimism for the second consecutive survey period, reaching the lowest level in about three years.

• Interestingly, US businesses remained among the most positive worldwide in their growth forecasts. However, confidence within the US market has dropped since June, with manufacturers in particular scaling back their expectations. According to survey respondents, lower business sentiment in the US reflects economic uncertainties both domestically and globally.

Malcolm Edge adds: “Businesses around the world are grappling with massive uncertainty that is driving down sentiment across the board. This data categorically demonstrates that the world is in the midst of a prolonged and deep crisis of sentiment. Clearly, the European contagion has already spread and is exacerbating weaknesses in other economies around the world. In particular, the manufacturing sector has seen a substantial drop in confidence, likely reflecting their exposure to a weaker global trade environment.”

“While most expected sentiment to drop in the Euro-zone since our last survey, few anticipated the declines that we have seen from the emerging markets and BRIC countries, which were widely thought to have rounded the corner on the global recession.

Source:  www.top-consultant.com

How does the capital measure up as a business destination against its fast-rising global rivals?

First, the good news: London continues to have more economic clout than any other city on the planet (see charts, below).  It also continues to shine as a beacon for foreign investment.

“I was talking to a group of UK inward investors this morning and they told me that London was the perfect place to be,” says Susan Haird, acting chief executive of UKTI, the government body that helps British exporters to win business and encourages overseas companies to invest here.

Now the bad news: with the centre of global economic gravity continuing to shift from the developed markets of the west to the new markets of the east, London’s pre-eminence is, many experts believe, under threat.

“I know that it’s taken a lot of bashing recently, but we still have a financial services sector  which is a world beater and is the envy of the rest of the world”

David Snell, lead partner in PwC’s London practice

“In a world of emerging – or in some cases emerged – new markets and business centres, we need to keep the focus on London,” says David Snell, lead partner in PwC’s London practice.

So let’s look at London’s great strengths and weaknesses as a business hub – and explore what policy-makers need to do to ensure that the capital maintains its global lead.

 “London sits in the middle of global time zones. It’s amazingly well connected in terms of transport links and the cosmopolitan mix of the people here,” says Haird. “We have a highly skilled labour force and a very stable regulatory environment.”

London’s strengths

Indeed, London has four particular USPs from a global business perspective…

London as a finance hub

London’s status as the world’s leading city for “economic clout” is rooted in its business and financial services sectors, PwC’s Snell. “I know that it’s taken a lot of bashing recently, but we still have a financial services sector which is a world-beater and is the envy of the rest of the world.”

Haird agrees that the City remains the capital’s commercial crown jewel. “London is still the world’s leading financial centre. The recent massive growth in finance services investment is a real vote of confidence in the City.” Indeed, according to UKTI figures released in July, the UK financial services sector saw a 212 per cent increase in jobs created during the 12 months to March 2011 – with London taking the lion’s share.

The London Stock Exchange is another world-beating magnet for foreign companies and investors, Snell adds. “It’s a hugely attractive market for many big and substantial Chinese companies, for example. This is a great opportunity for London in the future.”

London as a knowledge hub

“London has great universities, which are powerful sources of innovation,” says Haird. Snell says that these institutions are key to securing the city’s – and the UK’s – future as a global business hub. “A lot of CEOs and entrepreneurs from countries like China are looking to educate their children in the UK. And that’s because it offers one of the best education systems in the world.”

London as an innovation hub

 “Tech City is probably the big thing in London now: there has been a massive increase in ICT companies coming in,” Haird says. The east London digital hub is already home to one of the biggest communities of fast-growing technology firms in Europe – growing from 15 firms in 2008 to more than 300 in 2011, according to UKTI figures. Google is launching its own hub in Tech City, while Cisco is pumping £100m worth of investment into “entrepreneurship and innovation” into the area, as UKTI puts it.

London’s liveability

The importance of London’s cultural landscape to its commercial success is “significantly underplayed”, says Snell. “London is the envy of the world as a place of cultural vibrancy – its heritage, its creative arts – and Brits tend to be a bit too reserved about this. But we’ve got an opportunity to sell London by being proud about what we’ve got as a city.”

Haird concurs. “It’s sometimes a personal decision about where inward investors are willing to go. London’s great schools and cultural institutions and tourist attractions make it a wonderful place to live. This keeps the city in the forefront of peoples’ minds as a place to invest.”

London’s weaknesses

Here are the four areas in which policy-makers need to work harder if London is to head off competition from business and financial hubs elsewhere in the world.

Transport and infrastructure

“These have got to be areas of focus for policy-makers in the coming years,” says Snell at PwC. “Everyone would recognise that there are areas of our transport system and infrastructure that need to be improved in London: we’re by no means world beaters here.” But Haird at UKTI insists that government is making improvements. “London has to remain competitive in terms of infrastructure, which is where things like the redevelopment of the London Underground and overland services comes in,” she says.

“The government’s ‘one in, one out’ regulation policy, as well as the introduction of sunset clauses, has already contributed to £3.2bn in savings in terms of the cost of regulation to UK                business”

Susan Haird, acting chief executive, UKTI

Tax and red tape

“When it comes to London’s attractiveness as a location for a global headquarters, it all boils down to the cost of doing business,” says Snell. “There’s been a lot of talk around the 50 per cent tax rate at the employee level. This clearly needs to be an area of focus for government – but they are limited by what they can do because of the government’s own finances.” Again, Haird leaps to the coalition government’s defence. “The government’s ‘one in, one out’ regulation policy, as well as the introduction of sunset clauses, has already contributed to £3.2bn in savings in terms of the cost of regulation to UK business,” she says. The government has also pledged to cut corporation tax further by 2014, Haird adds. Avoiding over-regulation is another vital step for policy-makers to take, says Snell. “It really is important that London doesn’t lose its competitive edge by over regulating our financial services sector,” he explains.

Commercialising innovation

Sure, London’s universities are world class. But how much of their intellectual output is being harnessed by the business sector? Not enough, says Snell. “How much research is getting translated into actual technological improvements and developmental work that makes us a world beater in innovation? More needs to be developed into top-level intellectual property.” Indeed, as China and the Asian Tigers shift from manufacturing-based to knowledge-based industries, the need for London and the UK to harness its intellectual property has never been greater, Snell adds. “The number of international patents being filed is already moving very significantly towards emerging markets,” he warns.

Investing in skills

“We need to focus on getting the people with the right skills for the City,” says Snell. “Availability of talent is hugely important – and an area in which PwC is going to putting a lot of focus on in the coming months and years – working with schools and other organisation to enhance the skills base.”

Why London’s future is secure: Professor Richard Burdett, director of the London School of Economics’ Cities group – Professor Richard Burdett, director of the London School of Economics’ Cities group

“The future will bring opportunities, rather than challenges, for London. The city is already one of the best-connected international hubs in the world – both in terms of its air and rail connections, but also in terms of its time zone and digital connectivity.

All this means that London can benefit from increased engagement and transactions with hubs elsewhere in the world.

Cities do not work as isolated components. The world’s transactions operate via networks of cities.

Cities are about the movement of people, goods, money and information. London is fantastic at servicing those flows. As long as London keeps those doors open, it can only benefit.

If you start closing doors down via, say, hampering an Indian worker’s ability to stay in the UK, then you begin to have problems.

London also needs to respond to rising demand for accommodation – including housing and office space. The population is already at eight million and continues to expand.

Yet compared to other megacities such as Mumbai and São Paulo and New York, London has a relatively low density. The buildings are less close together, and there are more open spaces.

This means that London’s environment is generally of a higher quality. And it means that the city has capacity to accommodate and adapt to more growth when needed.

London also has an extraordinary amount of brown field, redundant industrial land.

It’s mindboggling that you can fly out of London from City Airport heading east, and for about 20 or 30 kilometres see unused space.

This is empty land that is round the corner, globally speaking, from Canary Wharf, the City and Westminster Abbey. 

This adds to London’s capacity to accommodate growth.

Finally, regardless of the complaints of Londoners, the city has an exceptional rail-based transport system that allows people from, say, Brighton to commute to work relatively easily.

Average commuting times in the greater London area are under an hour. In Sao Paulo they are around three hours. This is another major asset – especially in the light of growing efforts to reduce carbon emissions from transport.

On the cultural front, London’s combination of museums, art facilities, music scene and theatre – and most importantly education including international schools – means that the city is incredibly attractive, supported by the global dominance of the English language.

It’s a great place to bring up children and ensure that they are fit for purpose for a global world.

In the classes I teach at the LSE, the number of students from India and China continues to grow. This is only good news.

There is no doubt in my mind that London’s future as a commercial and cultural hub is secure.

London’s global  scorecards

Source: PwC Cities of Opportunity 2011

Source:  www.LondonlovesBusiness.com

 

Cut VAT to five per cent for new buildings to boost construction

Charlie Mullins, founder MD of Pimlico Plumbers:

“The one thing we could really do with is a cut in the rate of VAT to 10 per cent or even five per cent for new buildings and alterations to residential and commercial premises. This would further stimulate the construction and maintenance sector, over and above today’s announcements.”

 Have a back-up plan ready in case the Euro collapses

 Andrew Hawkins, founder, ComRes:

“The UK government should begin to draw the nation’s trading net deliberately wider than an EU that teeters on the brink of currency chaos. The very act of having a backup plan for the collapse of the Euro, for example by opening discussions with NAFTA, would reassure many that the government is prepared to act untrammelled in the national interest.”

 Stop meddling in the private sector

 Julie Meyer, founder and CEO of Ariadne Capital:

“The government must end its Santa Claus-type game that it continues to play, of handing out more money to individual enterprise programs or infrastructure projects. None of these programs will work. In 13 years of working with fast-growing young businesses, I’ve never once heard anyone claim, ‘Were it not for X, Y or Z government program, I wouldn’t be a business success’. The government needs to focus on doing less and getting out of the business of running things. Politics cannot keep up with economic forces.

“Government should not try to figure out which projects to back, or which teams to back. The ultimate confidence move would be to trust British people to build the right companies, spend with their own money, and invite investors from around the world in to back our projects. By enabling people and businesses to keep more of their own money by small business tax holidays and lower income tax, business owners and citizens would build and spend. When they do, they create growth.”

 Legalise drugs to fund investment in the creative industries

 Steve Henry, advertising creative and founder of HHCL and LondonlovesBusiness.com columnist:

“The government should invest in the creative industries. Britain is still a global leader in this sector, but only just, and creative people ‘make’ stuff out of difficult situations.

“At a conference I attended recently various speakers talked about the emerging markets – the massively growing middle classes in China and India etc. They’re going to have global economic dominance for the next 20 years, so let’s invest in British perversity and originality.

“Also, let’s teach everyone to write computer code and then everyone can create. The government could fund this investment by implementing the Robin Hood Tax [financial transactions tax] and legalising drugs in order to generate tax revenue.

“In the advertising sector George Osborne should cut back on regulations, create tax breaks for training initiatives, talk up the industry and put government money into marketing.

“The government used to be the biggest advertiser in the country, and then they decided to cut back. But history shows again and again that brands which invest in marketing come out of a recession in a much better shape than those that cut back.

“Britain as a brand will suffer unless it has a proper marketing budget.”

 Promote the ‘Made in Britain’ brand properly to boost exports

 Denys Shortt, founder of £120m turnover pharma distriubution firm DCS Europe:

“Make sure that the UK section at tradeshows looks as amazing as Germany or the Turkish displays! We looks like the paupers at the moment compared to these countries

“To promote Made in England the chancellor could insist that all products in the UK carry Country of Manufacture. To protect jobs in Britain and to promote British manufacturing we need to know what is Made in Britain.”

 Halve the number of civil servants

 Charlie Mullins, founder MD of Pimlico Plumbers:

“The civil service is still massively bloated. I’ve said it before: we could lose half of the current crop of civil servants and not notice from an output point-of-view. Clearly making so many unemployed overnight would cause another problem – but in five or ten years time we could do with hundreds of thousands less of these meeting wallahs, who add nothing to the economy.”

 Ditch heavy industry and focus on internet start-ups and education

 Ning-Li, serial entrepreneur and co-founder of Made.com:

“George Osborne should be focusing on the service sector and internet start-ups as these have the potential to grow rapidly. He should steer away from heavy industries as they are capital intensive. Internet based companies are easy and cheap to start.

“Cloud computing has made it so much simpler for people to start a business and there are huge opportunities there for companies. The game is changing too rapidly for the big players; it is the young start-ups that are able to react to changes in technology, mobile, i-Pad and social media.

“The other area to focus on is education, as this is what ultimately drives innovation. When you look at the macro-economic picture countries are starting to specialise more and more and Britain is exceptionally strong in innovation and design. We should play to those strengths.”

 Stop forcing entrepreneurs to risk their homes when they apply for the EFG

 Nick Pelling, founder of security camera manufacturer Nanodome:

“I think the chancellor should change back the terms of the Enterprise Finance Guarantee scheme so that participating banks can’t require entrepreneurs to put their primary residence on the line first. This is what the older Small Firms Loan Guarantee did: I believe this change is the number one reason why EFG lending has foundered so badly. I wrote to the Chancellor to point this out: not sure if he got the message, though.”

 Cut taxes on food and drink served in pubs so they can employ more local people

 Iain Loe, manager, Campaign for Real Ale:

“A cut in VAT for food and drink served in pubs, restaurants and so on to five per cent would give a real boost to this sector. It is allowable under EU regulations and countries such as France and Ireland have seen many thousands of jobs created in the hospitality industry by cutting VAT. The chancellor should also abandon his plans to increase beer duty by two per cent above the rate of inflation in his next Budget. Pubs and pub goers should not be penalised by yet another increase in beer duty. A freeze in beer duty would be a boost to the brewing industry where there are now 900 breweries. And the Treasury would find that they would take in more money and the cost would be fiscally neutral.”

Launch a profit-share investment fund for tech start-ups, financed by state money, managed by entrepreneurs

Rebecca Burn-Callander, web editor, Management Today:

 “The government should launch an independent scheme, backed by  state money but managed by successful tech entrepreneurs, which invests in smart new technology. This vehicle could take a small stake (capped at a minority percentage), bring these projects to fruition and get paid if the company is bought, or made public. There could even be a profit-share model. Inward investment would go bananas. Foreign firms would be fighting each other off to nestle among our tech high-flyers – a real UK Silicon Valley-esque boom. There would be sizeable R&D tax breaks in the mix.”

Give companies that invest in capital expenditure a VAT holiday

 Rowan Gormley, founder, Naked Wines:

“First, we need to break the vicious circle.The government doesn’t have any money to invest but companies do. They aren’t investing because times are uncertain

“If the government gave a VAT holiday for companies that invest in capital expenditure:

1. It will release cash tied up in companies’ bank accounts, stimulate growth and create jobs

2. It will make Britain a more efficient exporter”

 Ditch the politicians and bring in entrepreneurs

 David Brown, co-Founder CEO of Ve Interactive:

“What could be cut is the number of politicians employed across the  country and their associated benefits. Quite a few could be replaced by seasoned entrepreneurs from industry who would advise for free. It would be the equivalent of playing football for your country!”

Sponsor “manufacturer hackspaces” so start-ups can experiment with high-tech kit

 Nick Pelling, founder, Nanodome:

“If the coalition had any kind of genuine interest in seeding manufacturing in the UK, what they should do is sponsor some manufacturer hackspaces [an area with lots of high-tech kit lying around for start-ups to experiment with], like London Hackspace but kitted out with killer stuff for building physical things. Out goes the toy stuff like the MakerBot, but in come the 5-axis mills, the Solidworks, Rhino3d, Moldflow and OneCNC licences, the EOS direct metal laser-sintering box, the 70-ton vertical plastic injection moulding machines, the computer controlled lathes, etc.”

Make the country’s richest pay for their own healthcare

Andrew Hawkins, founder, ComRes:

“The biggest budget line – the NHS – has to contain the most scope for cutting. It is indefensible for the Earl and the business tycoon to get free board and lodging when being treated as an NHS in-patient. It is also pretty unjust to tax low income earners to subsidise the operations of those who can afford it.

“So I would require that where people are privately insured, or are in the top tax bracket, they should be required to pay or have their insurer pay for some (non-emergency) NHS treatments. I would also take some elective procedures out of public funding altogether so that the NHS is there for people who really need it. It is equally as unjust to expect the State to pay for the medical treatment of those who can afford to pay for it as it is to expect the State to fund housing, food or clothing.”

Reinstate the Highly Skilled Migrant Programme visa, so tech companies can get the skillsets they need

Spencer Hyman, former COO of Last.fm, founder and CEO of artfinder.com, investor:

“Bring back the Highly Skilled Migrant Programme visa so tech companies can round out team skill sets with some critical hires with specific skills that don’t exist in the EU. At every start up I’ve ever worked in (Amazon, Last.fm, Artfinder) we’ve had to use HSMPs to bring on key skills.  We’d rather not to have had to bring in people from abroad – it’s more expensive, riskier and time consuming.  But it’s been the only way to get those skill sets.”

 Focus on high-value rather than high-tech manufacturing, and turn RBS into a state-backed investment bank to do it

David Merlin-Jones, director of the Wealth of Nations Project at independent think tank Civitas:

“The Autumn Statement had one major omission: support for low- and medium-tech manufacturers. We need to encourage all kinds of manufacturing, not just specific types that have come to the government’s attention. We should be focusing on promoting high-value industry, and in Britain, it is often the process of production that creates the value, especially if the product is quite basic.

“The chancellor should be investing in providing these companies with the means to grow, and the real barrier for many firms is a lack of financing. In 2010, the number of SMEs wanting a loan increased, but so did loan rejections. The private financial sector is failing the UK and the Government should step in to find a permanent answer. The optimum solution would be the transformation of RBS into a state-backed investment bank.”

Get consumers to buy more British produce rather than imported food

Chris Gee, sales director, SilverDoor: “George Osborne should launch a major initiative to encourage Britain to consume a much higher proportion of British produce. Why do we continue to import and consume so much French water, Danish bacon or New Zealand butter? Thousands of extra British jobs would be created, and there would be extra environmental benefits too from the massive reduction in food miles.”

Create grants for SMEs offering apprenticeships

Lesley Clarke, founder, director and current owner of Nicky Clarke Salons:

“Apprenticeships are the foundation of the hair salon industry and require huge amounts of investment and resources from salon owners. To help maintain the quality of training employment opportunities we need to see some form of apprenticeship grants being created, especially for SMEs.”

Talk positively about the economy to revive the retail sector

David Hathiramani, founder, A Suit That Fits:

“I think changing the tone of the conversations regarding the economy into a more positive conversation could instil more confidence to spend.

“Everybody understands that we have problems; however, people who are in jobs have low interest rates and low mortgage repayments, so they should have more disposable income. Unfortunately, all of the people who are in this category still have a huge fear – so we need to overcome this.  It would be great for the government (and the opposition) to focus on the positive aspects, and really encourage spending.”

Give UK companies preference for public infrastructure work

 Mark Mills, chairman of national accountancy firm HURST:

“When building either infrastructure such as roads, or large capital  projects such as the proposed A14 toll road, there should be recognition of UK bidders for the business (in spite of EU regulation) so that capital does not flow out of the UK.”

 Move away from higher education and teach more vocational skills

 Kevin Poulter, associate, Bircham Dyson Bell LLP:

“In the domestic market, investment is still needed in school leavers, the teaching of vocational skills in much needed trades and specialisms and a move away from the expectation and incentivisation of further and higher education.”

 Give the 4G cellular spectrum away free to incentivise companies to improve download speeds

 Rowan Gormley, founder, Naked Wines:

“Instead of auctioning the 4G cellular spectrum, it should be given free to the companies that build the fastest networks. Download speeds in central London are 1/60th of those of Tokyo. They are slower than downtown Harare. Cleaner, greener and cheaper than new railway lines.”

 Help early-stage small businesses find alternatives to debt financing

 Jane Reoch, investment manager at the Centre for Entrepreneurship, Cass Business School:

“Debt financing is not always the right option for younger companies.  Providing longer-term capital to the UK’s best small businesses (e.g. £0.5m – £5m turnover) would help achieve more sustainable growth; and also avoid the basic problem of over-leveraging.

“As the government starts to properly address the debt burden, there have been many areas of cut-backs.

“To me, it’s all about the right allocation. Is the level of our contribution to Europe correct? Would part of this be better directed towards the high-performing SME’s in the UK? As with any business, each cost needs to be examined to ensure it is delivering real impact, and results.”

 Make the UK more business-friendly by cutting taxes

Greg Secker, founder and CEO of trader coaching company Knowledge To Action:                                                                                

“Reduce the 50% tax on high earners; it simply targets the wealthy, who will move away from the UK and go elsewhere to both live and do business.

“The huge taxes businesses face also need to be addressed. We’ve already seen some businesses move their headquarters away from London to elsewhere in a bid to find a better deal – Cadbury openly moved to Switzerland to avoid high taxes – and it’s incredibly damaging to London’s reputation as a business leader and is restricting growth.

“It’s really very simple – the success of a business is dependent on its environment. Currently London is an extremely inhospitable place for businesses.”

Slash red tape in the financial sector

Sir Michael Snyder, chairman, Kingston Smith:

“What the financial services industry needs is to cut red tape and bureaucracy so that we can make our contribution in pumping money into the economy.”

Offer small business grants via the internet

Mark Mills,  chairman of national accountancy firm HURST:                                                                                                           

“He could offer grants accessible via the internet, checked to avoid fraudsters, offering SMEs help with marketing, utility costs and reductions in business rates. This injection into the economy to small businesses would provide stimulus immediately – there could be conditions regarding repayment if falsely acquired, to provide protection.”

 Ease parking charges to encourage consumers to shop

 Lesley Clarke, founder, director and current owner of Nicky Clarke Salons:

“Inner city parking and congestion charges are all adding to the cost of a typical shopping trip and this is heavily affecting retail confidence. It can now cost in excess of £15 in cities to park your car for the day. In London, it’s likely to cost at least £30.”

 Fund a mentoring scheme to encourage business thinking among young people

Jim Boulton, partner, Story Worldwide:

“The obvious project that springs to mind is Tech City, the Olympic legacy project that seeks to position East London as a high growth, entrepreneurially fuelled technology hub. A government-funded scheme to mentor young business people, motivate school and university leavers and re-train young people who have gone down dead-end career paths, would go a long way.”

 Deregulate employment law for SMEs

 Helen Reynolds – Chief Executive of HB RIDA, a private equity vehicle that invests in SME recruitment businesses:

“For SMEs employment deregulation has to be a step forward.  A broad brush approach to employment regulation whether you have five employees or 5,000 has never been a fair state of affairs. It is important for small businesses to be able to manage their human resource effectively and practically.”

 Found a government-owned bank run by private sector professionals to lend to successful small businesses

Kate Craig-Wood, MD of SME, Memset:     

“What I would like to see is Osborne setting up a government-owned bank with the specific mandate of lending to small businesses with a proven revenue model, who could accelerate their growth with additional capital. I foresee such a bank facilitating the development of our own “Mittelstand” – the German-owned SMEs that are the powerhouse of the German economy. Such a bank should not be run by civil servants, whose track record is no better than the bankers’, but by private sector professionals with expertise in high-growth SMEs.”

 Employ a more efficient network of government advisors

Ajit Chambers, CEO, The Old London Underground Company:

“If your advisors are not working differently in this financial environment – retrain or replace.

“We have had many meetings with TFL, London Underground and the Mayor of London, and we have learned that a multitude of excuses are used by ‘the gatekeepers’ that are actually not what the executive or leader sanctioned at all.

“It is crucial that the UK’s government is directly persuasive in large business deals rather than letting such misnomers occur, many of which fall under the excuse of Health and Safety Bureaucracy.”

Get tougher on utility suppliers to save businesses money

Chris Cole, founder, Make It Cheaper:      

“The government should do more to get tough on business utility suppliers that automatically renew contracts for their customers without their consent. For example, a supplier of electricity to a business can change its prices at the same time as renewing a contract without the bill payer’s say-so or even them being aware it’s happening to them. By the time they do realise, usually because their bills have suddenly doubled, they are locked in for another year.”

Encourage the rich to invest in property not pension funds

Matthieu Cany, managing director, Sextant French Property Agents:

“To promote growth in the property sector in the UK and overseas I think it would be a good idea to offer more tax breaks in order to motivate cash rich individuals to not place their money in pension funds (who speculates on the sterling or the euro) but in New Build properties which will boost the construction sector and create more jobs.

“The new jobs will generate more CIS and PAYE taxes which will help the government to get its money back on the tax breaks. This is a very classic measure in France to give tax breaks with the idea of getting it back from income tax paid by jobs created.”

Suspend stamp duty for first-time buyers

David Barnett, CEO of developers Londonewcastl       e:

“A simple solution to ease restriction on housing supply could be a two-tier planning system where large schemes are dealt with by one centralised body at a high level (eg the GLA) – obviously with a full public consultation process in place – and smaller scale domestic developments being dealt with at a local level.

“We feel that stamp duty for first time buyers – under a certain threshold – should be suspended until a more normal mortgage and debt market returns. This could be balanced out by an increase in duty levied on sales to overseas buyers, who are benefitting already from the favourable exchange rate.”

Banks should work alongside business angels

Keith Wilson, founder and partner,  Bradenham Partners:

“Banks should be encouraged to work alongside business angels and specialist investment houses by supporting small businesses pound for pound with overdraft funding. Young people are this industry’s and also  the country’s future, so creating  greater rewards for companies taking graduates or young people off the dole is a critical incentive. I would suggest no employee or employer NI for 12 months associated with such placements.”

Dramatically improve defence policy and judicial processes

Nick Telson, co-founder of Design My Night:  

“I would like to see a streamlining of the judicial and public enquiry review process as I think we waste too much time on enquiries that just tell us what we already knew.

“I think there are improvements to be made in the defence budget – I read yesterday that a new air force carrier today has already cost us £4bn and it hasn’t even been delivered. Smarter foreign policy could save billions and lives.”

Invest in skills, not just ‘hard’ infrastructure

Malcolm Edge, UK Head of National Markets at KPMG:

“It is encouraging to see so much investment in Britain’s ‘hard’ infrastructure, yet business needs more support when it comes to the ‘soft’ backbone of the economy.  The chancellor’s proposed youth contract is certainly a step in the right direction, but it is not just about placing the unemployed in any job – business will only grow if the right people are given the right skills for the region in which they live.  We need to see more investment in skills so that the accusation that new entrants to the labour market are not work ready can no longer be levelled at school leavers.”

Source:   www.londonlovesbusiness.com

Optimism among the chief financial officers (CFOs) of the UK’s largest businesses has declined for the third consecutive quarter to the lowest levels since spring 2009, according to the latest Deloitte CFO Survey. On average, CFOs see a 34% probability of a “double dip” – a return to recession.

The UK has seen an economic recovery, which, by historical standards, has been fairly robust. Nonetheless, CFOs have remained consistently cautious this year on the sustainability of the recovery. As a result, corporates have maintained a strong focus on controlling costs and this remains the top priority for most CFOs.

While the economic outlook is uncertain, credit conditions for large UK corporates have continued to improve. CFOs now see the cost of new credit as being lower than at any time since the Deloitte CFO Survey began in the third quarter of 2007. Perceptions of credit availability also rose sharply and, for the first time, more CFOs rated credit as being “available” than “hard to obtain”.

Margaret Ewing, Deloitte partner and vice chairman, commented: “UK corporates entered 2010 with a cautious view on the sustainability of the recovery and have stuck to this view. The dominant themes we saw in the first half of 2010 continue into the second half of the year. Financial optimism among CFOs has dipped further, credit conditions have continued to improve and corporates remain strongly focussed on cost control.

“The financial and credit crisis may seem to be over, but the headwinds from the recession – especially in the form of overleveraged consumer and government sectors – are leaving CFOs cautious on the recovery. They are reacting by cutting discretionary spending and holding back on hiring.”

Most CFOs (75%) believe this is not a good time to take risks and, for this group, their priorities are defensive – reducing costs and increasing cash flow. However, a substantial minority of 25% take the opposite view, saying this is a good time to take risk. For this group the priorities are introducing new products and services or expanding into new markets or by acquisition.

Irrespective of risk appetite, cash is less of a concern for large corporates than a year ago, reflecting improvements in credit availability and stronger corporate cash flow. CFOs see expansionary strategies, such as introducing new services and expanding by acquisition, as prominent priorities, testifying to a continued search by the corporate sector for growth opportunities.

CFOs believe that excessive leverage in the corporate sector as a whole has been largely eliminated. With interest rates seen as being at very low levels and credit increasingly available, corporate demand for credit is starting to rise. CFOs are more positive about raising gearing for their own business. After a sharp contraction in demand for credit over the last 12 months, CFOs expect to increase their demand for credit over the next year.

Ian Stewart, Deloitte chief economist, commented: “Corporates are finding it much easier to raise credit and there has been a remarkable improvement in perceptions of bank credit availability. Perhaps surprisingly, given that we have just come through a massive credit crisis, CFOs are increasingly willing to contemplate raising gearing.

“Despite all the uncertainties, CFOs are positive on the outlook for corporate revenues and profit margins over the next 12 months. 59% see revenues rising over the next 12 months, while only 17% expect a decline. They are slightly less positive on profit margins, which may reflect expectations of rising material, wage and other costs.

“CFOs also see capital expenditure rising over the next year. But, with cost control at the fore, the balance of opinion is that hiring and discretionary spending will shrink during this period.

“So, overall, the good news from this quarter’s CFO Survey is that large UK corporates are finding it easier to raise capital. CFOs are positive on the outlook for corporate revenues and profits and many are looking for growth opportunities. Yet one of the dominant findings of the Deloitte CFO Survey during the recession persists a year into the recovery – in an environment of uncertainty cost control is king.”

Other key findings from the Q3 2010 Deloitte CFO Survey include:

Bond issuance and bank borrowing remain in favour with CFOs as a source of funding. Equity lags behind but has risen in popularity for the first time in 12 months.

After the recent rally in government bonds, a majority of CFOs regards government bonds as being overvalued. Equities on the other hand are considered to be undervalued.

82% of CFOs expect a rise in M&A activity over the year ahead, with 18% rating growth by acquisition as a strong priority for their business over the next 12 months.

Source:  Top-Consultant