Business investment intentions strong despite economic uncertainty

Businesses in the south east continue to feel affected by economic uncertainty and market volatility, but are more confident about their own prospects than that of the wider economy over the next 12 months.

According to new research by Clydesdale Bank released today (September 12, 2011), more than half (58%) of the businesses questioned in the south east expect to increase turnover by more than five per cent in the year ahead, despite less than a quarter (24%) being confident the economy will return to healthy growth.

Despite their concerns about the economy, 46 per cent are planning to invest at least five per cent of their turnover back into their business in the next 12 months with the leading investment priorities being new staff, new equipment, training existing employees and developing new products and services.

The most pressing concerns for south east businesses are support for research and development costs and fluctuating fuel prices with 26.5 per cent and 25 per cent citing these issues as the key factors in their businesses’ future growth respectively.

Will Lindsay, regional director for Clydesdale Bank, said: “Businesses are clearly more confident about their own prospects and in control of their own destiny, than they are for the wider economy, despite the impact of rising fuel and materials prices.

“Our research highlighted what businesses in the south feel will help them and the economy, with increased consumer spending and confidence (20.6%) and low interest rates and the strength of the pound (both 20%) coming out as the key drivers to economic growth.
“It is inevitable that there will continue to be bumps in the road to economic recovery, but businesses should continue to focus on their own strengths.”

Across the industries nationally, IT and telecoms businesses appear to be the most confident with more than half (51%) expecting increased turnover of at least five per cent in the next 12 months. Healthcare and education businesses are the least confident with only 32 per cent and 23 per cent respectively expecting similar growth.
This is mirrored in their investment intentions with 59 per cent of IT and telecoms businesses planning to invest at least five per cent of their turnover back into the business compared to only 27 per cent of education-focused businesses.

Will Lindsay continued: “Clydesdale Bank is working with hundreds of companies across the south which have the confidence to invest so they can target new markets, launch new products or take on more staff.

“Our commitment to supporting trading businesses is stronger than ever and we continue to attract growing numbers of owner-managed small and medium sized businesses plus mid-corporates. Good businesses with strong management and robust business plans will generally find support.

“This is evidenced by the fact that we recently met our promise, three months ahead of schedule, to deliver our two-year pledge to advance £10 billion of new lending to business and personal customers.”

This further support for small businesses builds on Clydesdale Bank’s Investing for Growth support package which it introduced last spring and offers both new and existing business customers a dedicated planning service and a more flexible approach to lending. Loan repayment holidays, interest-only repayments and extended loan and credit facilities are just some of the flexible support options available under the Investing for Growth initiative which also includes a dedicated financial planning service.

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