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Investment intentions pick up in first quarter of 2017

UK businesses expect to continue spending this year after investment intentions picked up in the first quarter of 2017, according to the findings of a Bank of England survey.

23 MARCH 2017 | CHRIS SEEKINGS
Businesses generally intend to continue with their investment plans ©Shutterstock
Businesses generally intend to continue with their investment plans ©Shutterstock

Discussions were had between 12 regional agents of the bank, and approximately 700 companies across the country over the last few months, to determine business conditions from firms across all sectors of the economy.

It was found that businesses generally intend to continue with their investment plans, particularly ones designed to mitigate increased energy and labour costs, but that some firms were more reserved about long-term projects.

The agents’ report states: “Investment intentions edged higher and point to modest growth in spending over the next year. The pickup reflected stronger demand and an easing in uncertainty around the likely returns of projects, particularly shorter-term plans.

“Firms had been going ahead with plans designed to mitigate costs. That typically entailed investment in technologies such as renewables, robotics, or enhanced business systems.

“Increased R&D spending on new products was seen as vital for many firms, and the shift to e-commerce was encouraging investment in online capacity and logistics.

“A lack of visibility of the UK’s future trading arrangements continued to weigh on longer-term plans for some contacts.”

In business and financial services, turnover grew moderately overall since the start of this year, but was at a broadly similar pace to what was seen in the last quarter of 2016.

“A range of financial services companies reported strong growth and demand for IT services was especially buoyant,” the report said.

“That reflected upgrades to software and hardware, growing concern about cybersecurity issues, and increased use of cloud-based services.

“Business service exports had been boosted by a pickup of global demand growth and the fall in sterling.”

It adds that the decreased value of the pound is expected to reduce household purchasing power, while employment intentions point to a slight growth in hiring over the next six months.


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