Barclays UK

UK corporates deeply cautious but believe only private sector can deliver growth

Press Release   •   Nov 29, 2011 08:25 GMT

A new Barclays Corporate survey of 300 business leaders* across the UK shows that the private sector remains deeply cautious about the future of the economy.

In the lead-up to the Chancellor’s Autumn Statement, 43% of respondents said they had shelved plans to invest recently due to current market turmoil, while 66% of corporates expect to see more business failures in their sector and 54% view the private sector as too risk adverse.

The survey also found that the private sector is not looking to Government to resolve the current economic malaise; just a third of UK corporates believe the Government has the ability to drive economic recovery and has the strategy to do so. Another third believe the economic situation is simply too much of a global issue for the Government to resolve.

The vast majority (84%) of respondents also said the environment in which they do business is becoming either steadily or rapidly more competitive, highlighting the challenges faced by businesses today.

Despite the challenges, however, exporting remains a bright spot. Of the corporates surveyed that export, 60% predicted the amount of goods or services they sell aboard would grow in 2012, compared with just 3% that predicted export orders would fall. It was one area that corporates were crying out for more Government assistance, with 85% of corporates stating the Government could and should be doing more to support trade.

Ian Stuart, Managing Director, Barclays Corporate, said: “It is clear that UK corporates believe the economic recovery is not going to be Government led. This is not a criticism of Government but a recognition of the limits of Government. Businesses accept they have to compete their way to better times.

“The challenge is back on businesses themselves. It is easy to say no to risk taking in the current environment, but it must be done if corporates are going to compete globally, both for the success of the individual business and the economy as a whole.”

Other key findings:

* The majority of corporates, 52%, believe having a Coalition running the country is a positive, versus 40% who see it as negative.

* 57% of corporates believe equity investors are too risk adverse.

* Three quarters of UK corporates are absorbing the vast majority of input price inflation rather than passing on to customers, with these businesses stating they are passing on just 25% or less of the input price inflation they face.

* Improving efficiency/productivity is the main tool of UK corporates in the battle against the impact of inflation on their bottom line.