UK: The London economy continued to grow slowly in Quarter 2, building on improvements made since the start of the year, according to the London Chamber of Commerce and Industry (LCCI).

The latest Quarterly Economic Survey (QES) shows that the majority of key business indicators have improved in the last three months although often only by a small margin. While the figures do not represent a great improvement from Q1, the capital is in fact in a much stronger position in comparison to a year ago, with some indicators making substantial gains since Q2 2009.

Businesses expecting to see an increase in turnover rose from 57 per cent to 64 per cent – this time last year just 45 per cent of companies expected their turnover to rise. Those expecting their profits to increase have also gone up, although only slightly, moving from 53 per cent last quarter to 56 per cent this quarter. This is however a large increase from a year ago, when just 33 per cent of companies expected their profits to rise. The number of firms reporting a rise in domestic sales is up three per cent (to 34 per cent, up from 22 per cent Q2 09), export sales up two per cent (to 32 percent, up from 26 per cent Q2 09), cash flow up five per cent (to 28 per cent, up from 15 per cent Q2 09) and output up two per cent (to 42 per cent, up from 25 per cent Q2 09).

Businesses in London remain concerned about the overall economic climate with 69 per cent of companies expecting inflation to worsen over the next twelve months. Similarly, 60 per cent of firms are expecting interest rates to rise, while 68 per cent also believe unemployment will worsen in the year to come. The business community in London is divided on how the economy as a whole will fare in the next four quarters with 34 per cent of firms expecting things will improve, 32 per cent expecting more of the same and 34 per cent predicting decline.

Colin Stanbridge, Chief Executive of the London Chamber of Commerce and Industry (LCCI) said:

“It is encouraging to see that Quarter 2 has seen continued growth in London despite gloomy predictions by some analysts. Compared to this time last year the economy is in much better shape but with deep public sector spending cuts on the horizon the next twelve months could be much tougher for the capital.”

Source:http://www.londonchamber.co.uk/lcc_public/article.asp?id=0&did=47&aid=4479&st=&oaid=-1