London firms 'bearing brunt' of downturn

Date: 18th February 2009

Small businesses in London are being hit hardest by the challenging economic climate, research has suggested.

The investigation by the Open University Business School found that while firms - including sole traders - in the capital were generally having a tough time, some sectors were performing better than others.

Leisure and personal services have faired reasonably well during the downturn, the survey showed, while individual regions have seen businesses react to the recession in different ways.

Professor of enterprise development at the Open University, Colin Gray, said: "Small retailers in London responded to the crunch by cutting employment, while those in the East Midlands and east of England reverted to cutting investment."

He added that firms in the agriculture and construction sector had also resorted to reduced investment, while wholesalers were "slashing prices".

A report published by the British Retail Consortium earlier this week revealed that retailers in the capital had actually seen a 6.5 per cent rise in year-on-year sales during January.