Uk Firms Cut Back Investment As Prices Keep On Escalating – With Brexit A Further Concern

by Liz Seyi Digital marketing manager

There are now as many businesses in the UK that intend to reduce investment as there are firms that plan to increase it, a new poll has indicated.

As The Guardian has reported, the Institute of Directors (IoD) has released its latest Economic Confidence Index, which shows the findings of a poll of bosses about the UK’s economic prospects – and their own investment intentions.

The overall economic confidence reading was -54 for July 2022, which was only a slight improvement from the -60 recorded for June. 69% of the business chiefs quizzed were either very or quite pessimistic about the national economy, compared to a mere 15% who expressed optimism about the outlook.

As for investment plans, the equal numbers of firms intending to increase spending and decrease spending constituted the weakest reading since October 2020. Back then, of course, the country was still largely gripped by the uncertainty associated with the COVID-19 crisis.

Unsurprising indications of firms’ plans to lower their expenditure

Since the start of 2022, there has been a steady decline in the investment intentions of UK businesses – which isn’t likely to be a surprising development for many firms presently working alongside a chartered tax adviser in south-west England.

After all, the more that input costs have increased, the greater the buffeting effect this has had on the broader economy and firms’ ability to invest.

It also seems that the situation has sapped business leaders’ confidence about their own prospects. More than half are now stating that the national economic conditions are having an adverse impact on their organisation, with escalating energy costs and skills shortages also causing frustration.

Among the expressed reasons for business chiefs’ pessimism, inflation ranked highest, with a third of firms citing it – not exactly a shock, given that inflation is currently at its highest level in the UK for four decades.

However, for almost a fifth of pessimistic bosses, it was actually the UK’s faltering trading relationship with the European Union (EU) that was the main cause for concern. Customs checks and border queues have added to the headaches for ‘UK plc’.

As IoD chief economist Kitty Ussher observed: “Perceived risks in the macroeconomy continued to drive the behaviour of business leaders in July, with concerns around inflation, our relationship with the EU and political instability causing investment intentions increasingly to be put on hold.”

What shape is your business likely to be in come 2023?

To say that the overall picture for firms up and down the UK is continuing to be an unpredictable one would be quite an understatement. That, in turn, underlines the importance of ensuring your own business benefits from the most tailored and informed support.

Enquire to TS Partners today, and we can give your business the benefit of a skilled and experienced chartered tax adviser in southwest England so that you can be more confident in taking advantage of all the investment opportunities the rest of 2022 and 2023 could bring.