UK companies expect to grow

News

The majority of UK businesses are planning for growth in the next few years, despite predicting that the effects of the downturn will last into 2011.

These are the conclusions of the latest survey by the Institute of Chartered Accountants in England and Wales (ICAEA) on the affects of the downturn in the UK a year after the recession was declared.

The study revealed that growth plans are currently more cautious, with 66 per cent expecting to increase turnover in the next two years, compared with 84 per cent in 2008.

According to the survey, a third of businesses have been affected negatively from the downturn, up from 20 per cent in 2008, while only 15 per cent said that their organisation remained unaffected.

The results also showed that smaller businesses with up to nine employees were hit the hardest, compared with last year when they appeared not to be affected by the immediate impact.

Around 84 per cent of businesses said that the affects of the recession made it difficult for them to plan ahead, 78 per cent predicted a reduced revenue growth, 63 per cent expected a reduction in staff and 53 per cent said that they were less able to invest in capital.

Despite this, UK businesses appeared to remain positive, with two-thirds claiming their competition had weakened while 50 per cent said more skilled staff were available.

Overall, companies are forecasting the effects of the downturn to continue for the next one-to-two years.

Michael Izza, chief executive of the ICAEW, said: ‘This survey demonstrates that, as the economy begins to recover, businesses are focusing on longer-term competitiveness issues.

‘The government should follow this lead.

‘Despite the serious impact on companies, the resilience of UK plcs shows through, with the majority planning growth.

‘There needs to be proper consultations on any proposed changes and enough time and support for businesses to get to grips with it all.

‘This has not been the case in the past.

‘At a time when there is so much reliance on business to help stabilise and grow the economy after the recession, these results should send serious alarm bells.’