UK private businesses look to the future

Published at 00:01 AM on 26 February 2014

Three in 10 (28%) of UK private businesses claim better financial health than before financial crisis;

38% intend to hire new staff this year;

31% say pay rises are likely this year;

Peers named as most helpful source of assistance;

Economy is biggest concern followed by costs and access to capital.

With three weeks to go to the Budget, the UK’s small and medium sized businesses are showing encouraging signs of recovery, according to the findings of a survey by PwC.

Experience of recovery:

Over half of private business leaders (52%) agree that positive economic news reflects their current experience while less than two in 10 (19%) disagree.  Some 28% of private business leaders say they are in better financial health than before the financial crisis.   London is the most positive region with more than half (53%) of the capital’s businesses agreeing they are better off.

Businesses with revenues of over £2.5m are most positive, but businesses in the £500,000 to £1m annual revenue bracket have also fared well. The research suggests that, as a group, businesses established for 11-15 years have generally weathered the economic storms best.

PwC partner, Stephanie Hyde, leader of PwC regions, said:

“On balance, the UK’s private business leaders are positive about prospects for the year ahead. After years of cost cutting and efficiency, we’re seeing companies turn their minds to new products and services, and the future.*

“There are patches of good growth across the UK, despite many businesses still dealing with tough trading conditions and the demands of adaptation.”

Intentions this year:

Some 38% of businesses say they intend to hire new staff this year. 67% say redundancies are unlikely, and only 13% say they intend to make redundancies.  Pay rises are likely at 31% of businesses, while only 12% of business leaders admit to considering pay cuts. 

Interestingly, cuts in pay are thought to be more likely in London (23%), begging the question whether the capital’s optimism stems from new sources of revenue, or new found efficiencies in business models. Some 18% of the UK’s private businesses are considering changing employment terms this year.

Worries and concerns:

UK private companies say uncertainty about future economic conditions is the biggest factor preventing them investing in expansion or transformation activities, followed by costs and access to capital - the latter being less of a concern for larger companies (£2.5m annual turnover plus).  When it comes to expanding into new areas, companies cite the same concerns, followed by a lack of contacts and relationships. 

Looking more closely at costs, 28% of private business leaders are most concerned about taxes and other business charges, while 22% say people costs are most worrying. Supplier costs are the next biggest concern (15%), followed by the cost of energy (14%).

PwC partner, Suzi Woolfson, leader of PwC’s private business practice, said:

“The picture in many areas and sectors is one of encouraging signs but continued challenge as UK businesses seek to recover from the economic knocks of recent years.

“Companies are focusing on cash and looking for sources of finance to secure their business models for the long term. Today, this includes looking at the growing choice of alternative financiers such as peer to peer lenders.

“The UK’s business private leaders say that peers and professional membership organisations have been the most helpful source of support to them over the years.”

 

ENDS

Notes to editors:

1. According to BIS, 99% of the UK’s 4.9 million businesses employ less than 250 people, accounting for nearly half (47%) of all private sector employment and a third of the total UK private sector turnover.

2. As part of the Shifting Sands report, 421 leaders of UK private businesses were interviewed by Opinium for PwC in January 2014. 

3. *48% of UK CEOs say new products and services (innovation) are the most likely route to growth this year, a big jump on previous surveys – PwC Global CEO Survey, January 2014.

 

Andrew Smith

PwC | Communications
Office: +44 (0)207 213 1216 | Mobile: +44 (0)7738 845 149
Email:[email protected]
PricewaterhouseCoopers LLP


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