London’s economic engine is powered not only by global corporations and financial giants, but by a vast ecosystem of small and medium-sized enterprises that shape the city’s streets, neighbourhoods and local labor markets. Now in its seventh year, the 2023 London Business 1000 survey from London Councils offers one of the most detailed snapshots yet of how these firms are faring in a period defined by inflation, skills shortages, changing work patterns and lingering post‑pandemic pressures.
Drawing on the views of 1,000 businesses across all 33 boroughs, the study tracks confidence, investment, recruitment and the evolving relationship between employers and local government. It examines which sectors are growing, where pressures are biting hardest, and how firms are responding to structural shifts in the capital’s economy – from the rise of hybrid work to the urgent need to decarbonise.
As London policymakers wrestle with how to sustain growth, protect jobs and keep high streets alive, the London Business 1000 has become a key barometer of business sentiment and a practical guide for targeted intervention. The 2023 edition sheds light not only on the immediate challenges facing firms, but also on the longer‑term choices that will determine how inclusive and resilient London’s economy will be in the years ahead.
Mapping the evolving profile of London’s small and medium sized enterprises in 2023
Across the capital,the city’s commercial backbone is shifting in both character and concentration. Micro-firms and growth-minded SMEs continue to cluster in inner boroughs, but 2023 saw a quiet diffusion towards outer London high streets, industrial estates and new co-working hubs. Knowledge-intensive services now dominate the SME landscape, with digital, creative and professional outfits displacing more traditional high-street retail in several boroughs. This transition is reflected in changing workforce patterns too, as hybrid working encourages businesses to seek smaller, more flexible premises and to tap local talent pools rather than centralised office districts.
These shifts are far from uniform. Borough-level snapshots reveal distinct specialisms and emerging ecosystems, often shaped by transport links, affordability and local policy initiatives:
- East London: rapid rise of tech, media and logistics SMEs.
- South London: expanding health, social care and construction supply chains.
- West and North London: resilient professional services and boutique manufacturing clusters.
| Borough cluster | Dominant SME type (2023) | Notable trend |
|---|---|---|
| Central innovation belt | Digital & creative studios | Higher demand for flexible leases |
| Outer town centres | Personal services & retail hybrids | Return of local footfall post-pandemic |
| Industrial corridors | Logistics & light manufacturing | Growth driven by e-commerce fulfilment |
How borough level business data is reshaping local economic policy and support
For the first time, leaders across the capital can track how firms feel about infrastructure, planning and workforce issues down to individual neighbourhoods, revealing sharp contrasts that citywide averages obscure. This granular lens is already prompting councils to pivot from generic business support to evidence-led interventions, such as targeted skills programmes where recruitment pressures are highest, or streamlined licensing where growth firms report bureaucratic friction. In some boroughs, the data has challenged assumptions: areas long branded as “office-heavy” are emerging as hubs for creative micro‑businesses and social enterprises, pushing economic teams to rethink everything from workspace provision to evening transport links. As an inevitable result, policy cycles are becoming more agile, shifting from five‑year strategies to iterative adjustments informed by fresh business sentiment each year.
Local authorities are also using these insights to build more sophisticated partnerships with employers, moving beyond consultation exercises to co-designed support packages. Business feedback on late payments, digital connectivity and access to affordable premises is being translated into practical measures – from procurement pledges to fibre rollout priorities. In many town centres, the survey is now the backbone of place‑based regeneration plans, tying investment decisions directly to what firms say they need to stay and grow. Key examples include:
- Focused support for sectors where confidence is lagging despite strong local demand.
- Rebalanced funding towards high-impact interventions, such as skills and export advice.
- Data-driven lobbying to central government, backed by borough-specific evidence.
| Borough profile | Main policy shift | Business signal |
|---|---|---|
| High-growth corridors | More flexible workspace, faster planning | Pressure on space and timelines |
| Town-center high streets | Targeted retail and hospitality support | Low confidence, rising costs |
| Outer London industrial areas | Skills pipelines and transport tweaks | Recruitment gaps and access issues |
Challenges facing London firms from inflation to skills gaps and what councils can do
Inflation, rising energy costs and stubbornly high commercial rents are eroding already tight margins, particularly for micro and small enterprises that make up the bulk of the capital’s economy. Many firms report having to choose between passing costs on to customers, freezing investment, or cutting back staff hours.At the same time, businesses in sectors from construction and logistics to hospitality, creative industries and tech are struggling to recruit people with the right mix of digital, green and soft skills. This mismatch leaves vacancies unfilled, slows growth and risks pushing productive activity out of the city altogether. The latest survey wave shows that even businesses optimistic about demand are increasingly anxious about whether they can find – and afford – the people and premises they need to grow.
Councils are uniquely positioned to blunt these pressures by convening local partners and targeting support where it has the greatest impact. Through planning decisions, business rate reliefs and procurement policies, boroughs can lower the cost of doing business for high‑street firms and innovative start‑ups alike. They can also shape local skills pipelines,working with colleges,universities and employers to co‑design training,apprenticeships and re‑skilling offers that match real vacancies. Practical interventions include:
- Targeted reliefs and grants for firms in energy‑intensive or strategically critically important sectors.
- Flexible workspace strategies that protect affordable studios, labs and co‑working hubs.
- Local skills compacts aligning employer demand with training provision and careers advice.
- Data‑driven outreach to identify at‑risk firms and connect them quickly to advice and finance.
| Pressure on firms | Council response |
|---|---|
| Rising operating costs | Business rate reliefs and energy-efficiency support |
| Vacancy and skills gaps | Apprenticeship brokerage and employer-led training |
| Uncertain investment plans | Clear local growth strategies and place‑based incentives |
Targeted recommendations for councils to foster inclusive growth and business resilience
Survey responses from businesses across all 32 boroughs point to a clear mandate: councils that embed inclusivity, skills and stability into their economic planning are better placed to weather shocks and attract sustainable investment. This means moving beyond one-size-fits-all grants and rather co-designing support with local firms, particularly those led by women, ethnic minorities and young entrepreneurs who remain underrepresented in mainstream finance and procurement. Councils can use business rates data, high-street vacancy trends and local labour market insights to build agile support ecosystems that connect firms to targeted advice, affordable workspace and tailored finance.
- Prioritise inclusive procurement by simplifying bidding processes and ringfencing opportunities for SMEs, social enterprises and diverse founders.
- Invest in digital and green transitions through vouchers, shared facilities and advisory hubs that lower the cost of innovation.
- Strengthen local skills pipelines via partnerships with colleges and universities,focused on sectors where demand is clearly growing.
- Create resilience networks that bring together anchor institutions,landlords and business groups to coordinate responses to cost-of-living and energy price shocks.
| Focus Area | Council Action | Business Impact |
|---|---|---|
| Diverse founders | Targeted outreach & mentoring | Broader pipeline of local employers |
| Local supply chains | SME-kind procurement rules | Reduced leakage of spending |
| Digital capability | Subsidised training & tools | Higher productivity, new markets |
| Climate resilience | Support for retrofitting & adaptation | Lower costs, better risk management |
Concluding Remarks
As London navigates a period marked by shifting economic tides, the 2023 London Business 1000 offers more than just a snapshot of sentiment; it provides a grounded, data-driven lens on the capital’s business reality.The findings underscore both the resilience that has long defined London’s economy and the persistent structural challenges that cannot be ignored.
For policymakers, the message is clear: targeted, responsive intervention will be essential if London is to maintain its competitive edge, support its diverse business base, and safeguard good jobs across all boroughs. For businesses,the survey highlights the importance of innovation,adaptability and partnership-particularly with local authorities who are increasingly central to shaping the conditions for growth.
As the seventh year of this research draws to a close, one conclusion stands out. London’s future prosperity will depend less on any single policy lever than on continued collaboration between councils, businesses and communities. The London Business 1000 will remain a crucial barometer of that relationship-charting where the city is succeeding, where it is slipping, and where there is still time to change course.
