Hopes rise as recovery takes hold

BUSINESS optimism in London is at its highest this year, led by the financial and travel sectors, the London Chamber of Commerce said.

The balance of companies that believe the London economy will improve next year now stands at 11%, according to the LCC's third-quarter survey.

That compares with a 2% positive balance in the preceding quarter, and a negative balance of 16% in the first three months of 2003.

'The good news for every Londoner is that the recovery appears to be taking hold in the capital,' said LCC chief executive Colin Stanbridge.

The capital's businesses are even more upbeat about their own prospects, with the positive balance expecting an improvement rising 17 points to 38% from the second quarter.

The LCC said the recovery had almost certainly been sparked by the end of Iraq war alongside a strong stock market rally.

The recovery is being led by finance and business services, with 47% of firms in the sectors reporting a rise in output in the third quarter. In retail, 37.5% saw an improvement.

However, the clouds have yet to clear from London's manufacturing industry, echoing the trends in other parts of Britain.

Less than a quarter of manufacturing firms have seen an increase in output and a third reported a fall.

'There is alarming evidence that manufacturing is being left behind,' the LLC warned.