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Business confidence reins in capital investment

Businesses remain reserved on capital investment in response to the economic outlook, research has suggested.

The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) reveals businesses are remaining cautious on capital investment because of low confidence.

Nearly a fifth of businesses have above normal stock levels and over half are operating below capacity.

Overall, job creation plans remained subdued, although SMEs are more likely to grow their workforce in the next 12 month, with a predicted increase of 1.5%.

Michael Izza, Chief Executive of ICAEW, said: “This survey shows that businesses are responding to concerns about the economic outlook by cutting back on investment in equipment and people.

“This is at a time when Government desperately needs businesses to be growing. At the moment, it is hard to see where this growth will come from and the Chancellor needs to use the forthcoming budget to give businesses reasons to be more confident about the future, and unlock potential investments.”

Salary expectations continued to fall, as the labour market rate of growth in the private sector will not be strong enough to prevent unemployment rising in 2012.

Grant Thornton CEO, Scott Barnes said: “The key performance indicators in the BCM remain weak and the concern for business is that domestic and international demand will remain low as we see unemployment continue to rise in 2012 and wages remain static.

“However these figures are not as bad as anticipated and many of the companies surveyed are predicting at least some growth.

“They need greater certainty in domestic and global markets before they opt for a more expansive path.”

This was posted in Bdaily's Members' News section by Tom Keighley .