London Growth Plan – impact for SMEs

Following a turbulent decade marked by Brexit, the pandemic, and rising inflation, the London Growth Plan sets four ambitious targets for productivity, economic inclusion, green growth and international trade. 

London’s SMEs have a vital role in delivering on these goals. That’s why the Mayor of London is committed to helping the capital’s one million small businesses secure finance, find new customers, discover talent and more.  

But what will the impact of the growth plan be for London’s SMEs? And how can your business benefit from all the support, resources, and opportunities available?  

You can download the full London Growth Plan if you want to learn about all its exciting objectives and proposals in more detail or read on to discover how it will impact SMEs specifically. 

What is the London Growth Plan? 

The London Growth Plan was created in the context of “six big shifts” that are already shaping the way we live and work. How effectively the city responds to these shifts will determine whether it will continue to be the dynamic, thriving success story it has been since its inception as a Roman trading outpost. 

1. Workforce in flux – London faces labour shortages and skills gaps due to Brexit, Covid’s impact on participation, high housing costs and rising health challenges. 

1. Changing nature of work – Hybrid, gig and AI-driven work are reshaping London’s economy, creating both flexibility and insecurity while raising expectations for quality jobs. 

2. From innovation taker to innovation maker – London now has the chance to lead global innovation in life sciences, climate tech, AI and quantum, not just apply technologies from elsewhere. 

3. Polycentric growth – London’s economic future lies in both sustaining its historic centre and fostering new growth hubs across the city through regeneration and infrastructure. 

4. Climate and ecological emergency – London must urgently decarbonise, adapt to climate change and mobilise green investment to drive both sustainability and economic opportunity. 

5. Reordering of global trade – London must adapt to shifting geopolitics and supply chains while expanding service exports into new global markets. 

What are the four ambitions? 

The London Growth Plan will see the government partner with businesses and other organisations to deliver on four bold targets.  

Productivity 

• Target: raise average annual productivity growth rate to 2% by 2035 

• Why it matters: London’s productivity grew at just 0.12% per year between 2008 and 2022. 

• Strategy: grow high productivity sectors and the skilled workforce. Help businesses scale and export. Invest in housing and infrastructure. 

Economic inclusion 

• Target: raise household weekly income of lowest 20% of Londoners by 20% by 2035 

• Why it matters: London, the UK’s richest city, has the most people in poverty. 

• Strategy: improve pay and employment rights, reduce economic inactivity and living costs. Grow incomes of underrepresented small business owners and increase employment of underrepresented groups. 

Green growth 

• Target: accelerate progress towards London achieving net zero by 2030 

• Why it matters: decarbonising London will drive job creation and innovation 

• Strategy: support businesses in decarbonising and adapting to climate change. Enable private sector investment in zero carbon projects. Invest in green skills and infrastructure. Scale green innovation businesses internationally and attract foreign direct investment. 

A global capital 

• Target: increase London’s service exports by at least 6% on average per year 

• Why it matters: London has always been a global city, and this reputation is central to its success. This success must drive growth and opportunity in the rest of the UK   

• Strategy: invest in the growth of London’s most productive service export sectors. Grow the impact of London’s global brand and promote its values. Push tech investment out of London to other parts of the UK and make the city a springboard for global growth for the UK’s most innovative companies   

What will the economic impact of the London Growth Plan be? 

By achieving the ambitions detailed above, London will make major economic improvements, including: 

• The city’s economy will be £107bn larger, contributing an extra £27.5bn in taxes for the Treasury and netting an average of £11,000 in additional pre-tax income for its inhabitants  

• At least one million households would have an extra £50 per week to spend after covering housing costs 

How does the London Growth Plan help SMEs? 

The London Growth Plan includes a series of short-term actions and long-term goals that will benefit businesses in the capital.  

Over the next decade, you can expect: 

• Growing demand for goods and services as the economy grows. 

• A growth in the pool of talent with the skills you need to grow your business. 

• To find it easier to secure loans and risk capital to invest in your growth. 

• To more easily find relevant support. 

• More opportunities to trade internationally. 

• More affordable workspaces for small businesses. 

• To find it easier to secure public sector contracts. 

• Cleaner, safer, busier high streets. 

Key growth sectors 

These sectors are economically significant to London and will receive focused support as a result of the Growth Plan: 

• Financial, professional and business services: including fintech, regtech, enterprise tech, cyber & proptech. 

• Creative industries: film, TV, gaming, music, marketing, fashion and architecture. 

• Experience economy: culture, events, sports, attractions, retail and hospitality. 

• International education: international students.  

• Frontier innovation: life sciences, deep tech, climate tech, AI, quantum computing, bioengineering, advanced robotics & materials science. 

Support infrastructure 

Helping SMEs find the support they need to succeed is a cornerstone of the Growth Plan. Building on the legacy of the London Business Hubs, Grow London Local, delivered by London & Partners, is a free service that provides businesses with essential tools and resources and events for learning and networking.  

As well as articles and webinars on everything from starting up to growing your sales, at Grow Local London we have a team of multilingual small business managers on hand to offer tailored advice and support. Since its launch in 2024, the platform has reached over 250,000 entrepreneurs and supported 16,000 businesses in the capital.  

The business support strategy will encourage businesses like you to boost productivity by investing in new tech like AI, improving leadership and management and actively investing in growth. There will also be specific support for businesses to take climate action as part of a coherent business support service. 

Access to finance 

Investing in innovative businesses is a big part of the Growth Plan. This will be achieved through Local Government Pension Scheme pools, championing UK capital markets, and supporting institutional investors in innovation – for example, attracting foreign sovereign investors and supporting London universities. 

Another one-year action is the launch of a new fund that will provide loans and equity funding to high-growth SMEs. Delivered by Funding London - which has already supported more than 800 businesses with £1bn in private and public sector finance – the new fund will invest £20m initially and seek co-investors of up to £100m. 

In partnership with the British Business Bank and other key players in the responsible finance sector, the initiative will also explore interventions such as the creation of a Community Development Finance Institution (CDFI) to lend to London’s community businesses. 

Business development 

The government will work with leading London universities to develop a new quantum tech cluster that will attract investment and help startups grow. 

Grow London Global’s scaleup export programme will continue to support scaleups from key growth sectors to expand internationally. In particular, it will focus on supporting ‘frontier innovation’ businesses and growing exports.  

The Plan will look to actively close the entrepreneurship gap by helping those who face barriers to growing their businesses. Currently, lower-income Londoners, women, people from minoritised backgrounds and disabled Londoners can struggle to access finance and suitable business support. Helping them to succeed will help the city succeed. 

Talent 

The Inclusive Talent Strategy will grow the size of the skilled workforce, giving businesses access to a much greater pool of workers who possess the skills they need to scale. It will achieve this by helping Londoners who face barriers to work get quality jobs, expanding and diversifying workforces in growth sectors, investing in green skills, and making London an attractive destination for talent from overseas.  

Local focus 

With 30% of the capital’s jobs in high streets and town centres outside the city centre, local areas and the small businesses that call them home are also set to receive a major boost from the London Growth Plan. The government will partner with local businesses, Business Improvement Districts, investors, community groups and others to make local areas safer, cleaner and greener.  

This will involve improving public spaces and transport links, tackling crime and antisocial behaviour and investing in local growth strategies. By 2026, Creative Enterprise Zones will provide affordable workspace to support more than 1,000 creative businesses, 40% of which will be led by diverse founders.  

Community and social economy businesses (such as social enterprises, cooperatives, mutuals and community interest companies) are another focus. By supporting them, the Plan will create inclusive local growth and make it easier for vulnerable or excluded Londoners to access the labour market. 

Plan for Change 

The Plan for Change is a government initiative to back SMEs across the UK. Running concurrently with the London Growth Plan, it will give small businesses in high streets and rural communities across the country the tools they need to grow.  

Key elements include: 

• Making it easier for businesses to expand into new markets by launching the Business Growth Service, prioritising SMEs accessing government and public sector contracts, supporting underrepresented entrepreneurs and increasing UK Export Finance’s capacity by £20bn. 

• Tackling late payments and modernising the tax and customs system. 

• Providing more access to finance through Start-Up Loans, the Growth Guarantee Scheme (which has already unlocked £250m in funding) and an additional £3bn in funding for the British Business Bank.  

• Tailored support for local businesses to help revitalise the high street, including new growth incubators, hospitality and night-time economy zones and lowering business rates for Retail, Hospitality and Leisure properties with rateable value below £500,000 from April 2026. 

Investing in business skills with the launch of Digital Adoption pilots, funding leadership and management training, boosting access to enterprise education and £1.2bn more a year for skills. 

Conclusion 

As one of London’s small businesses, you are integral to delivering the Growth Plan. It also represents an opportunity for you to build resilience and scale sustainably.  

One enduring barrier to growth has been that aspiring entrepreneurs and small business owners in London simply haven’t been aware of the wealth of resources available to them or how to access essential support. Yet there’s never been more help and it’s easier than ever to find tailored, relevant support by exploring the support available through Grow London Local. 

Grow London Local: Support for London's small businesses

No matter where you're based in London, you'll find relevant support and guidance on business planning, sales and marketing and much more, as well as opportunities to connect with like-minded business owners. Visit Grow London Local now