Top companies add £40bn to cash mountain

Michael Bow
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THE UK’S biggest companies have increased the piles of cash on their balance sheets by more than £40bn since the start of the financial crisis – enough to cut the UK’s annual deficit by a third, fresh figures out today show.

The wall of cash retained by firms in the FTSE 100, excluding banks, has increased 34 per cent since 2008, up by £42.2bn, according to new numbers from Capita Asset Services.

Companies cutting back on investment and retaining their earnings rather than paying out big dividends have driven the hoarding trend.

The average FTSE firm now has £1.9bn sitting on their accounts.

Capita commercial director Justin Damer said: “This will prove unpopular with investors, who resent companies sitting on huge cash piles earning low returns.”

Capita forecasts that stock market investors would see dividend payouts triple to £238.4bn if companies returned all their gross cash to their investors, up from £72.4bn. The biggest hoarders are oil and gas producers, which account for more than a third of the FTSE 100’s cash pile, though in total 17 sectors across the market have seen cash balances shoot up.

Despite the stash of cash, companies are putting the money to good use, paying down nearly £20bn of debt over the last five years. Net cash positions have also risen, thanks to short term debt repayments. In total FTSE 100 companies have £166bn in cash and cash equivalents such as short term debt instruments on hand.