Businesses delay capital investment

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Almost two thirds of UK businesses generated a cash surplus in the last tax year, according to research by the Institute of Chartered Accountants in England and Wales (ICAEW).

The survey of 500 businesses found that 62% made a cash surplus last year while 69% expect to make a cash surplus during the current tax year.

Despite this, many businesses are delaying capital investment until they feel assured about the direction of the economy.

The ICAEW found:

  • 24% of businesses are holding 20% or more of their annual turnover
  • 70% are not confident enough in their business prospects to invest
  • 52% are unsure about the economy’s long-term prospects.

The ICAEW’s latest Business Confidence Monitor showed that 17% of businesses felt less confident about their prospects in Q1 2015, up from 7% in the same period in 2014.

Stephen Ibbotson, director of business at the ICAEW, said:

“We don’t want to see firms just battening down the hatches which could stop our recovery in its tracks.

“The next government should make it a priority to confirm the new rate of the Annual Investment Allowance. Businesses plan long-term and waiting until December’s Autumn Statement isn’t quick enough.”