Survey reveals that more than half of companies in the capital are optimistic about future prospects, with expansion plans on the horizon but concerns are raised over the cost of doing business in London.
The latest CBI/KPMG survey reveals that, while most firms in London still feel some impact from the recession, spending plans have improved compared with six months ago.

According to the results, 53% are optimistic about their future business prospects - up from 7% six months ago. It was also revealed that 58% of firms plan to expand their business in the next 12 months, with 32% of those planning to expand within London.

However, firms are concerned about the impact of the new 50p rate of income tax, with 57% of companies stating that they believe it could stop businesses from choosing London as a base or staying in the UK in the long-term.

The cost of doing business in the capital is seen as a weakness by 78% of firms, while 85% said that the poor quality and reliability of London's public transport system

Despite this, companies' investment plans are more positive than they were six months ago, with 31% planning to increase spending on recruitment and training, IT infrastructure, equipment, plant and machinery and on product and process innovation. Of the businesses surveyed, 34% also revealed that they plan to spend more on marketing and promotion.

KPMG London chairman Richard Reid commented: "With over half of the capital's businesses planning to expand and increase spending in the second half of this year, it is clear that London will continue to be the driver of economic growth in the UK."

Encouragingly, concern about crime has eased somewhat among London's businesses, having peaked a year ago during the recession. In this survey, 47% said crime was a problem for their business, compared with 62% last year.

The confederation of British Industry (CBI) London director Nigel Bourne said of the survey's findings: "There is a growing sense of optimism among London's businesses, with firms more upbeat about the coming six months. Even though most companies rate the capital as a good or very good place to do business, the level of taxation and the transport system are all seen as denting its ability to compete on the world stage."

He added: "We must continue investing in London's vital infrastructure and ensure it can compete with other cities globally. Nurturing home-grown talent is also going to be important during the recovery."