Businesses set to invest even less next year

Tim Wallace
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BUSINESS investment around the world is set to fall in 2014, defying hopes of an economic recovery according to analysts at Standard and Poor’s.

The credit ratings agency expects capital expenditure by the world’s biggest 2000 firms to drop five per cent next year, a sharp fall after growing by a meagre two per cent in 2013.

The strong commodities markets which have driven investment in mining have dropped away, removing one incentive to spend.

And Europe’s continued weakness is also a threat, the analysts said.

“Eurozone growth will be very low and that is not encouraging enough to really allow firms to take a more aggressive financial policy,” said Standard and Poor’s Paul Watters.

“Corporate treasurers are keeping very tight financial discipline, being very tight on discretionary spending.”

The agency has seen a boom in companies applying for credit ratings, with around 200 new applicants so far this year.

However rather than indicating a rise in borrowing to invest, this may simply show banks in Europe are still cautious on lending.