Capital 500: London Quarterly Economic Survey Results, Q4 2024
Tuesday 5 January 2025
Summary
Our Q4 2024 Quarterly Economic Survey findings reflect a London business community, balancing cautious optimism with growing economic pressures. The resilience of London firms continues to shine through, with many still optimistic about their profitability and turnover in the coming year.
What we found
Domestic Demand: Domestic demand dropped off slightly in Q4, according to London businesses. The net balance for domestic sales – the percentage of firms reporting an increase minus those reporting a decrease – contracted from +6 to +4 in Q4 2024.
Export Demand: The latest QES for Q4 2024 revealed that export demand has remained consistent. After a sluggish Q3, the net balance for export sales remained level, rising just 1 point to +2 in Q4.
Labour Market: London businesses reported mixed labour market activity during the fourth quarter of 2024. The employment balance – which measures reported workforce levels in the past three months – fell 3 points to -4 in Q4, down from -1 in Q3.
Recruitment and training: After dropping sharply in Q2 and partially rebounding in Q3, recruitment activity increased in Q4 to the highest levels since 2020. Nearly a third (30%) of firms said they had tried to hire in the previous three months in Q4, up from 26% in Q3.
Business Costs: London businesses’ cost pressures appeared to have increased in Q4. Almost two-thirds (61%) of companies said their energy costs had risen in Q4, up from 52% in Q3. Just 3% of London f irms said their energy costs had fallen over the previous three months in Q4, down from 8% in Q3. The energy costs balance rose 14 points to +58 in Q4.
Cashflow and Investment: London businesses experienced a slower pace of cashflow growth in the fourth quarter of 2024. The cashflow net balance fell slightly from +3 to +1 in Q4. Three in ten (29%) London f irms said their cashflow had increased in Q4, the same as in Q3.
Business Confidence: Despite increased turnover and profitability expectations, the overall company prospects balance fell to +15 in Q4, the lowest f igure in the last four quarters. This trend divergence highlights a mixed outlook among businesses. The most significant declines were seen among micro firms, with the balance dropping 15 points to +12, and outer London companies, where the balance fell 20 points to +10.
Economic Outlook: Business optimism for the London and UK economies declined in the fourth quarter of 2024. Three in ten (31%) firms expect London’s economy to improve in the next 12 months, down from 39% who said the same in the Q3 QES. The percentage of companies who think the capital’s economy will worsen over the coming year increased from 20% in Q3 to 31% in Q4.
About this report
For over a decade, the London Chamber of Commerce and Industry (LCCI) has conducted a Quarterly Economic Survey (QES) of its members to gauge business performance and general confidence levels across the capital. This is part of the biggest and longest-running national private business survey, conducted by regional chambers of commerce across the UK every quarter. Savanta surveyed a total of 520 London business leaders between 18 October and 17 November 2024. All data was weighted to be representative of all London businesses by company size and broad industry sector.
