07 April 2014
The UK’s largest businesses are planning to invest up to £200 billion in the next two years, according to research by Deloitte.
The survey of 132 senior executives of companies with revenues in excess of £1bn, found that 80% intend to invest this year, with close to 70% earmarking at least £250m of investments to drive growth. Deloitte estimates that Britain’s biggest businesses will invest up to £90bn in 2014, with an increase in 2015 to £107bn.
However, Deloitte says the resurgence of business investment will be phased as some companies use cash for other purposes; 58% say they intend to return cash to shareholders this year and 11% will continue to focus on strengthening their balance sheets.
There are also differences in investment strategy by sector and ownership type. Healthcare, telecommunications and chemicals companies appear set to lead large-scale investment this year, with consumer businesses and financial services companies more likely to delay such investment until 2015. Over 70% of non-listed businesses indicated that they would invest in both 2014 and 2015, compared with 26% of listed companies.
David Sproul, chief executive of Deloitte UK, said: ‘Over the last 12 to 18 months the steadily improving economy has led to an increase in corporate risk appetite. However, that has not yet translated into the level of investment policymakers had hoped for. In 2013, businesses invested just £3bn more than they did in 2009.
‘A well-balanced recovery requires a significant rise in corporate investment and a shift away from consumer-led growth. This investment is much needed and with the OBR also forecasting a 50% increase in capital spending over the next five years, all the signs are that it is on its way.’
VP of marketing at FinancialForce.com Tom Brennan has commented that it is ‘crucial that this finance is invested in the right areas in order to guarantee the benefits are fully felt. Traditionally, the ‘right investment’ would have focused on making a company more cost or business process-centric, but, the growth of a digital world and customer-based economy in which competitors are just a click away, means it is now imperative that any investment focuses on the customer experience.’
Brennan’s example of what such an investment could be includes ‘incorporating an efficient, frictionless ERP software system, providing the customer with one unified, informed voice from the company. This will also remove internal silos and barriers, thus boosting visibility, improving efficiency, and ultimately saving money, providing a 21st century experience, for a 21st century customer’.