Nearly half of UK firms put investment plans on hold ahead of the Budget, but now aim to press ahead with growth programmes despite worries over cost pressures, according to new research.
A post-Budget survey by lending giant Barclays showed that 46% of UK business leaders are now looking to restart plans that were paused in the run-up to the Chancellor’s October 30 announcements.
It also found that 37% are more likely to seek extra funding to invest in the growth of their business.
The economic environment remains challenging for those on tight margins, but there are signs of cautious optimism
The bank’s wider new business prosperity index also shows that, in spite of mounting concerns in some sectors of the economy, businesses remain optimistic in the outlook.
A survey of 1,000 business leaders by Barclays revealed that nearly two-thirds of companies (61%) feel confident in the UK economic outlook.
The index, which also analyses data from more than one million Barclays business clients, showed that firms expected to increase investment by 1.4% in the third quarter, up from the 0.7% increase reported for the second quarter.
Nearly half of firms – 44% – are looking to spend on key areas such as staff training and development, with 35% putting it towards research and development for products and services.
But the findings come amid warnings from many businesses over the cost implications of the Chancellor’s move in the Budget to increase employers’ national insurance contributions, as well as further rises in the minimum wage next year.
Retail groups such as Sainsbury’s, Marks & Spencer and Asda, as well as hospitality firms including pub group Fuller’s, have revealed significant cost hikes from the Budget measures and warned of price hikes for customers.
Matt Hammerstein, chief executive of Barclays UK Corporate Banking, said: “The economic environment remains challenging for those on tight margins, but there are signs of cautious optimism emerging.
“Our data shows many businesses with investment plans on hold are now confident to kick-start growth by seeking the funding they need.”
Barclays also announced a £22 billion business prosperity fund, which it is making available for new and existing business banking and corporate customers.
Its third quarter survey also showed that alongside growth aims, firms are still battling against a backdrop of weak consumer confidence.
Nearly two-thirds, 65%, of firms said they had reduced prices overall or introduced special offers and discounts to retain customers.
Hannah Bernard, head of Barclays business banking, said: “It’s reassuring that businesses remain committed to investing to grow, despite the extra financial pressures faced by many.”
