Companies hoard cash against growing market uncertainty

Tim Wallace
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EUROPE’S listed firms are sitting on £110bn, a new study reveals today, but are afraid to spend it in the uncertain economic environment.

German firms hold the most, with liquid assets and cash totalling £25.88bn – an average of £195m for each of the 133 firms covered in the study from Company Watch.

British hoards came in next with a total of £18.92bn, or £90m for each of the 211 firms, followed by 61 Swiss firms that are sitting on a total of £14.6bn, averaging £239m.

Despite the countries’ problems overall, large listed Spanish firms hold an average of £285m in cash, and Italian firms £143m.

“All European economies are affected to some degree by the Eurozone crisis and it looks as if the headlong growth of the BRIC economies is faltering, so it’s hardly surprising that the bosses of our largest businesses view debt as dangerous and cash as comforting,” said Nick Hood from Company Watch.

“Investors in these public companies have a clear choice between companies which have to rely on a risk-averse banking sector with limited liquidity and their better endowed brethren, who hold plenty of cash, but aren’t currently willing to risk too much of it on expansion.”