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Toy rocket taking off | AccountingWEB | UK businesses upbeat about growth prospects

UK businesses upbeat on growth prospects


With businesses across the UK expressing confidence and renewed optimism – according to a new Grant Thornton survey – the firm’s head of economic consulting Schellion Horn spoke to AccountingWEB about the results.

21st Feb 2024
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The renewed optimism and revenue growth expectations being felt by businesses across the UK is set to continue, according to Schellion Horn, partner and head of economic consulting at Grant Thornton UK LLP.

The firm’s latest Business Outlook Tracker, which surveyed 600 mid-sized businesses in early February, has found that respondents’ confidence in their revenue growth expectations has jumped +21 percentage points compared to December 2023, rising to 79%.

This is the “highest level seen” since August 2023 and is 8 percentage points higher than the rolling average.

Elsewhere, pessimism on revenue growth also dropped significantly to one of the lowest levels recorded.

Great levels of confidence

Horn spoke to AccountingWEB about the figures, noting that there’s been some “really great confidence levels”.

“Businesses want both an improved economic performance and economic certainty – when you see both, you always get better survey results. You expect more confidence.

“So I guess we weren’t necessarily surprised [by the results] because economic performance has been improving. We’ve got a technical recession but GDP is expected to grow and some sectors are definitely being hit less by the cost-of-living crisis than others.

“Inflation is starting to fall and interest rates should start to fall within the next year, so we’re seeing this improved economic performance.”

Certainty set to last?

Horn said that while uncertainty “comes at a cost”, the certainty businesses are seeing is helping boost confidence.

On whether this is expected to last, Horn thinks it will. “If you think about the economic performance, we haven’t had the high levels of unemployment of previous recessions,” she said. “So while we’re in a technical recession, the Bank of England has been working in lockstep with the government and they’ve been taking it very slow and steady – they’ve been gradually reducing inflation without looking too far into recession.

“This approach should continue – it’s not going to be long before inflation is back at the Bank of England’s 2% target. You’re not going to get the new zero rate you’ve had in recent times but they should be back to more normal levels, and I think businesses think it’s going to last.”

Investment drive

Horn noted that the tracker shows that companies are proposing to increase investment across all areas the survey monitors.

The biggest increases in investments are expected in skills development (+14 percentage points), growth in international markets (+14 percentage points), recruitment (+12 percentage points) and technology (+10 percentage points).

As for long-term investments, Horn said they “take time to pay off, so it really demonstrates that level of confidence”.

“If businesses didn’t expect that this optimism was going to continue and the economic performance was going to continue, they wouldn’t be investing in these areas.”

Budget looming

The timing of the data is notable as it falls about two weeks out from the Budget on 6 March, with the survey asking what businesses want the government to focus on.

Horn said there were three key areas: skills, infrastructure and research and development (R&D).

“In relation to tax specifically, they said they’d like to see tax incentives for employers to invest in skills, Net Zero and also a simplification of the UK business tax system,” she added. “Every survey, we always get tax simplification in there so it’s a recurring theme.”

With a general election on the horizon too, Horn stressed that politics “can have a large impact on optimism”.

“Hopefully, businesses will continue to get that economic performance and the economic certainty they need,” she said. “So actually, confidence levels and optimism levels will hopefully be pretty strong. We’re quite confident.”

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