Major UK firm plan investment surge, easing production challenge: Deloitte

1 week ago 26

Major British companies plan a surge in investment in 2022 to meet strong demand and respond to climate change against a backdrop of growing labour shortages, according to a survey from accountants Deloitte.

Some 37% of chief financial officers viewed higher capital spending as a priority for 2022, the most since the quarterly survey started in 2009 and up from 20% at the start of 2021.

If the plans translate into action, they could help ease long-standing problems with weak productivity in Britain, which many economists blame on lower rates of business investment than in other rich nations.

"CFOs seem to be looking past Omicron and plan to focus their businesses on growth in 2022," said Ian Stewart, chief economist at Deloitte. Previous concerns about Brexit and weak global growth have eased. Instead, businesses named persistent labour shortages as their biggest threat, ahead of the COVID-19 pandemic, while climate change then higher inflation and asset price bubbles were in third and fourth place.

The Bank of England said a tight labour market, which had pushed wage growth above pre-pandemic levels, was one of the main reasons why it raised interest rates last month from their record low 0.1%.

Policymakers expect inflation to peak at a 30-year high of around 6% in April and take more than two years to return to its 2% target. Digital technology was the area of investment which businesses expected to increase most relative to the pre-pandemic trend, followed by more general productivity and workforce skills. Physical plant and machinery and real estate were the least likely areas to see faster investment.

The biggest motivation for the investment was to support expected growth in demand in Britain, followed by longer-term business plans and overseas demand. Tax incentives and the government's levelling-up agenda - investment aimed at reducing regional inequality - were named as smaller factors.

Deloitte conducted the survey from Dec. 1-14, and spoke to 85 CFOs from 60 listed companies with a market value of 493 billion pounds ($669 billion) and 25 subsidiaries of large foreign firms.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Read Entire Article