Business confidence hits highest level since early 2022 but firms still not looking to invest, survey suggests
British businesses are holding back from investing in the UK despite growing confidence about their own prospects in the year ahead, a new survey suggests.
According to the British Chamber of Commerce’s quarterly economic survey, 56 per cent of firms expect turnover to increase over the next year, up from 53 per cent in the previous quarter.
This meant business confidence hit its highest level since the first quarter of 2022, before the Russian invasion of Ukraine.
But despite this improvement, firms are still not investing in new technologies. Only 24 per cent of firms reported an increase in investment over the final quarter of 2023 while nearly 60 per cent said the level of investment had remained constant.
“These results provide more evidence of a very low growth climate as most SMEs continue to report no improvement to sales, cash flow, or investment,” David Bharier, head of research at the BCC commented.
The UK’s rate of investment is currently the lowest in the G7. In 2021, UK business investment accounted for ten per cent of GDP compared to the OECD average of 12.5 per cent.
The government hopes that firms will be encouraged to invest through measures announced in November’s Autumn Statement, such as making permanent the full expensing of capital investment.
This fairly technical reform allows firms to effectively write off the cost of purchasing plant, machinery, technology and IT equipment and should provide a big incentive to invest.
“Investment continues to the Achilles’ heel for business,” Shevaun Haviland, director general of the BCC said.
“The Chancellor’s decision in his Autumn Statement to make full expensing permanent was very welcome. 2023 needs to be the year when companies are given further assistance to invest,” she continued.