London’s homegrown SMEs are battening down the hatches in the face of the ongoing challenges caused by the pandemic and cutting costs instead of investing in R&D, finds new research.
A study of more than 100 small and medium-sized businesses headquartered in London, conducted by City-based law firm Moore Barlow, estimates that firms in the capital have suffered losses of £800k each on average as a result of the Covid-19 pandemic, with a third (32%) taking a hit of £5m or more.
As a result, less than a sixth (14%) said they intend to develop new products and services over the next 12 months, while close to a third (31%) plan to implement cost savings including spending less on materials, reigning in employee benefits and asking workers to take salary reductions.
John Warchus, a partner in the Commercial & Technology team at Moore Barlow, said: “London’s start-ups and SMEs are the lifeblood of innovation in the city. Without their creative drive, the capital faces an innovation crisis that will see it start to fall behind other global cities at the cutting edge of business creativity.
“Despite the national government support on the table currently, such as R&D tax relief, it is worrying that it is not having the desired effect in London where higher operating costs make it a tough place to operate in economically uncertain times. It’s time the capital’s own political leaders, the Mayor of London and his business deputy Rajesh Agrawal, put together a plan for additional funding to help growing SMEs with R&D and rekindle the city’s appetite for innovation.”
Sophie Millward, Citypress
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