London's companies gloomy as trading jitters rise

Confidence is flagging among London businesses amid growing nerves over tougher trading next year, a gloomy industry survey warned today.

The latest Institute of Chartered Accountants in England and Wales/Grant Thornton confidence monitor said expectations for sales and turnover in 2011 were on the slide among firms in the capital amid "ongoing uncertainty" over economic prospects.

Ian Smart, a member of Grant Thornton's nation leadership board, said: "Rises in VAT, falling house prices, restricted access to capital and cash flow problems are just some factors leading to the subdued prospects for London-based businesses and these will continue to be a real cause for concern in the mid term."

Worryingly, firms remain reluctant to invest despite rising profits and sales during 2010, the survey found.

London businesses expect to increase staff by around 1.4% over the next year although this is around half the rate of expansion seen before the recession.

The businesses also said competition was much tougher than a year earlier, with firms having to work harder to maintain their share of the market.

Nearly half of firms, or 45%, said they were facing a greater challenge from rivals, the highest level since 2007.