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SMEs in London are lagging behind those in the Midlands, South West, and Wales when it comes to growth outlook, according to Clarity, a new data asset from business advisory firm Quantuma.

Quantuma’s Clarity data model has been created to inform and support the advisory and lending community in developing predictive insight into the health of UK’s SMEs. In addition to identifying opportunities for growth, Clarity also measures levels of distress amongst SMEs and their respective sectors to spot issues early and support advisers in taking action to resolve them.

In a new report on the London economy, the firm reveals that the capital has a growth score that is 19% lower than that of the Midlands, South West, and Wales and 14% lower than that of SMEs in the North and the Eastern regions. The report also shows that the number of distressed SMEs in the Capital rose gradually from September 2021 to December 2021.

The manufacturing, construction, wholesale and retail sectors have been worst hit, with London being profoundly impacted by COVID-related restrictions.

The good news is that despite the lasting impact of the pandemic, research has shown that in recent months, the capital has outpaced the rest of the UK with London’s GDP rising.

Simon Bonney, Managing Director at Quantuma, said: “There’s no doubt COVID has had a lasting impact on London as working patterns and spending habits have changed and will come under further pressure from inflation.

The green shoots of a GDP increase from January to March this year are encouraging and suggest that a slow recovery is gathering pace, however London SMEs need post-COVID support to help boost chances of growth in the coming years.

Clarity enables us to proactively identify those businesses in the Capital that are in need of support. We work with the wider advisory community to focus efforts toward sectors most at risk, as pressure builds on businesses from rising inflation, interest rates and the cost-of-living crisis.”