There is confidence London's businesses can flourish when the country leaves the EU.
London is a commercial and cultural powerhouse. It has dominated rankings of global business competitiveness, attracted investment and talent globally, and enjoyed economic growth which far outstrips the rest of Britain.
While nobody can foretell London’s future in a post-Brexit world, there remain opportunities in the transition period over the next two years.
Currently UK businesses are able to provide a range of financial services anywhere in the EU, and in the wider European Economic Area (EEA), while being based in the UK and regulated by UK authorities. This is because businesses offering financial services have ‘passporting’ rights which allow them to offer financial services to the rest of the EEA (28 EU members plus Norway, Iceland and Lichtenstein) while only having to follow one set of regulations.
Where change seems most likely is in London’s financial services sector. Around 5,500 UK firms rely on passporting, and they turn over about £9 billion in revenue, a lucrative source of tax revenue for the Exchequer. Exiting the single market could strip London of its coveted role in clearing Euro-denominated financial transactions. London is the world’s principal location for trading the Euro — a $2 trillion-a-day market — accounting for about 43 per cent of foreign transactions involving the currency.
If the City loses those rights, finance employers may be required to set up new European entities to maintain business in the bloc, and have warned on moving jobs from London.
The capital’s role as a financial hub goes hand-in-hand with its reputation for having strong legal, regulatory and political frameworks. Some of the immediate challenges will come from any potential changes to the free movement of goods, services and workers across borders. Many firms rely on Britain’s EU membership to sell their goods and services freely to customers across 27 member states. UK companies can also import supplies without tariffs.
Britain will have to strike new trade deals with the EU and failure to do so raises the prospect of trade tariffs and quotas and raised costs for exporters.
Trade is just the tip of the iceberg. Businesses will have to consider how Brexit impacts contracts, supply chains, data protection, intellectual property and the tax environment.
Access to skilled labour is essential to London’s economic dominance.
London has prospered from being a completely open city. Any block to the internationality is bound to affect business negatively. London remains an extraordinary city in which companies celebrate their employees’ many different nationalities.
The real issue with Brexit is the cultural and social damage potentially wrought to the capital. Londoners see themselves as part of Europe.
However, the prevailing view is that London’s status as Europe’s commercial and cultural capital will be preserved, whatever the outcome of Brexit.
London is a hotbed of innovation, such as our thriving fintech sector, with a depth of talent and diverse industries that few cities can match.
According to new research, half of the UK’s most influential, high-growth SMEs say their growth ambitions and development plans have been hindered by a lack of suitable funding over the past three years.
High-growth SMEs are defined as businesses that have seen annual revenues grow by more than 20 % on average over the past three years.
The top three priorities for the UK’s high-growth businesses over the next 12 months are
Experts have warned British businesses could face an extra £1bn tax bill next year.
Figures from the Office for National Statistics showed that Retail Price Inflation (RPI) was 3.9pc in September. This figure will be used to set new business rates values in April, on top of changes to the system that came in earlier this year.
Without intervention to freeze business rates, retailers and other firms would face a rates rise twice as large as last year.
The total increase in business rates across all sectors could be as much as £1bn in April if the 3.9pc increase goes ahead, based on the £25.7bn paid in rates in the current financial year.
The rise could add another £273m to retailers’ bills alone.
The consequences of the RPI figures could be severe for many shops in an uncertain position and fighting to survive. Consumers will face further distress as the pound in their pocket buys them less at the checkout.
For many shops, the rise could be “the last straw.
The cost of failing to take action will likely result in yet more empty shops and gap-toothed high streets.
Many businesses had already been affected by a revaluation of properties that came into force in April.
Companies, especially those in central London, have been hit by huge increases in their rates bill because the properties they rent are now worth far more than when the system was last assessed in 2010.
The Government should move to link the rates to the lower Consumer Price Index immediately, rather than in 2020 as is currently planned.
The Treasury has claimed the change to CPI indexing would save companies £1bn in the first three years, including a £250m saving for the retail sector.
Nearly 44 % of Small Business Enterprises have never checked their company’s credit score, according to new research.
Lenders use credit scored to determine whether businesses have a good track record of repaying debt, and are therefore one of the fundamental factors affecting a businesses' ability to get a loan.
Credit reference agencies compile reports and include details of all the loans and other forms of credit that a business has had in the past and whether a business has kept within the agreement. Issues, such as County Court Judgments, are also flagged.
A simple mistake in your credit history such as an incorrect address can affect lenders’ opinion of your business, meaning that you’re unable to obtain a loan or get good terms on credit agreements.
Research found that 44 % of SMEs had never checked their credit score, 6 % had not checked their score within the last 12 months, 18 % had checked within the last six months.
Here are seven tips to assist businesses to ensure that their credit history is as good as it can be:
Asset finance has become a fast-growing alternative finance option to traditional banks loans - which have been more difficult to secure for many small business owners since the 2007/08 financial crash.
There are different types of asset finance products available
90% of the nation’s 5.5 million small business owners still get their business loans from their main bank.
Conventional bank loans are helpful in certain circumstances – but for company owners targeting funding for specific areas of their business, relying on straight loans to cover a variety of sins often won’t be the most effective way of growing. Today, business owners are increasingly turning towards asset finance.
Here's how it works
Asset finance is a loan that is used to obtain equipment – from schools buying classroom equipment to caterers purchasing ovens.
There are two kinds of asset finance – lending against assets that you already own, and loans for buying additional assets.
The benefits of asset finance are numerous; it’s risky for small business owners to tie up their cash in equipment, which could, in turn, see them facing cashflow issues further down the line.
Hire Purchase allows you to spread the cost of an asset over a period of time – you pay in instalments and at the end of the term you have the option to take ownership of the equipment.
A lease might be more useful for SME owners concerned with flexibility. Instead of defaulting to owning the asset after you’ve paid the last instalment and option to purchase fee, you have the option to upgrade to a new piece of equipment or just return it.
It’s worth weighing up all the options. If you’re confused about what solution might work best for you, consider speaking to a broker – they are often experts in different sectors and will be able to help secure favourable term lengths for the benefit of flexibility.
Stamp duty in England may be changed to encourage people to make their homes more energy efficient.
Energy minister Claire Perry said householders would face "carrots and sticks" to prompt them into saving on heating bills and carbon emissions.
The government will fail to meet its climate change laws unless it can cut emissions from household heating.
The proposals are part of the government's Clean Growth Plan which defines how it aims to reduce carbon emissions across the whole economy.
Ms Perry said she was "interested" in the idea of lowering stamp duty on properties that have been made energy efficient, and described the idea as potentially "one of the incentives" to encourage homeowners into implementing energy-saving measures on their houses.
The application of stamp duty is devolved around the UK, so this would only apply to energy efficient homes in England.
Ed Matthew, from the climate change think tank E3G, has welcomed the plan but says there needs to be a clear strategy.
Ms Perry said the plan would cover all parts of the economy, including cars and industrial emissions.
But energy campaigners fear the plan will not contain the measures necessary to meet the government's own laws on cutting carbon.
British bank Aldermore Group Plc (ALD.L) is in preliminary talks over a possible 1 billion pound takeover offer from South Africa’s biggest lender by value, FirstRand (FSRJ.J).
Aldermore said on Friday it had received an “indicative proposal” of 313 pence per share in cash.
The Board of Aldermore has indicated to FirstRand that it is likely to recommend a firm offer at this (313 pence) level.
FirstRand could not immediately be reached for comment.
FirstRand already has a fast-growing London-based car finance business, Motonovo Finance.
Britain’s so-called challenger banks, such as Aldermore, emerged after the financial crisis to fill a gap in small-business lending.