UK’s largest businesses prepare £200bn investment

Over the next two years, the UK’s biggest businesses are set to invest up to £200 billion, according to research. The Treasury has welcomed the findings and it is hoped it will shift the economic recovery away from consumer-led growth.

A survey conducted by Deloitte questioned over 130 senior executives of companies with revenues in excess of £1 billion about investment intentions. It found that 80% intend to invest this year, with close to 70% earmarking at least £250m.

In total it’s estimated that up to £90 billion will be invested this year and £107 billion in 2015.

David Sproul, chief executive of Deloitte UK, said that over the last 12 to 18 months, improvements in the economy had led to a greater appetite for risk but has failed to translate into the level of investment policymakers had hoped for. In 2013, businesses invested just £3 billion more than they did in 2009.

“A well-balanced recovery requires a significant rise in corporate investment and a shift away from consumer-led growth. The investment is much needed and with the Office for Budget Responsibility also forecasting a 50% increase in capital spending over the next five years, all the signs are that it is on its way”, Sproul added.

Investment strategies differ by sector, with healthcare, telecommunications and chemicals companies set to lead large-scale investment in 2014. In contrast, consumer businesses and financial services companies are more likely to delay investment until 2015.

Chief secretary to the Treasury, Danny Alexander MP, commented, “It’s vital that UK businesses play their part to cement the recovery. I have been calling on businesses to up their investment since last year and this report suggests businesses are set to act.”

Separate research, conducted by the Confederation of British Industry (CBI) and PwC, support Deloitte’s findings. The study suggests that opportunities within the financial services sector are increasing along with expected growth in overall profitability, leading to rising investment intentions.

Investment intentions for the next year were positive across all investment categories, with IT predicted to grow the most rapidly.

Matthew Fell, CBI director for competitive markets described it as “encouraging” to see investment intentions continuing to be positive across the board for the second consecutive quarter.

Further reading:

Financial advisers sought for sustainable investment bootcamps

Vital for wealth managers to understand investors’ values and motives

Sustainable investment an ‘irreversible trend’, says ING exec

Survey shows investors continue to value independent financial advice

Impersonal experiences make financial service customers dissatisfied