UK Businesses Remain Cautious Despite Growth
Only 36% of small and medium firms are re-investing profits back into their business as majority are “sitting on” cash surplus as a precaution
Over half (62%) of UK businesses admit to having money leftover this year and 69% believe they will hold on to profits again next year, according to research compiled by accountancy and finance group ICAEW.
The research, which polled 500 businesses, revealed that nearly a quarter of companies had 20% or more of their annual turnover remaining but only 36% had started investing this surplus cash back into the business.
Of those surveyed, technology came out top as an of area business owners were planning to re-invest in at 66%. This was followed closely by employee training and staff development (63%) and marketing at 54%.
According to ICAEW, the majority of businesses are still cautious after the recession with business confidence and long-term faith in the UK’s economic future said to be necessary encouragements for small firms to start investing.
ICAEW’s director of business, Stephen Ibbotson, commented on the findings:
“The results suggest that businesses have learnt their lessons from the 2007 financial crisis. We have seen business investment slow down, and firms are now sitting on their cash and waiting for the right opportunity. And those who are looking to invest are doing so in their staff to retain them, rather than on plant and machinery.”
“But we don’t want to see firms just battening down the hatches which could stop our recovery in its tracks.”