The majority of London businesses expect to grow over the coming 12 months, easing fears that uncertainty about the wider economy might spark job losses. But companies report that skills shortages are hampering their expansion plans, with 60% reporting difficulties hiring the right people.

Partly reflecting this improved confidence, the Chamber of Commerce is forecasting that over the next two years, London's economy will grow at a faster rate than the UK, the US and the global economy. In 2001, the capital's GDP will grow by 2.4% compared to the UK (2.2%), US (1.8%) and the global economy (2.3%). And in 2002, 3.1% growth is forecast in London, against 2.1% in the UK, 3.0% in the US and 3.0% in the global economy.

However, the chamber's chief economist, Paul Valentine, warned that London's very success is putting unbearable strain on its infrastructure. Greater London's population has reversed a long-term decline, recovering from a low point of 6.7 million in 1983 to 7.4 million today. The number of commuters into central London has also grown considerably from 680,000 per day in 1991 to its current level of around 800,000, creating severe overcrowding on many parts of the rail network.