UK playing catch up to Germany, France and Italy as economic conditions improve
UK SMEs intend to create more than 450,000 new jobs in the next 12 months
London, Tuesday 6th November, 2012: GE Capital's latest European 'SME Capex Barometer' reveals that UK SMEs intend to invest over £45.8bn in the next 12 months, a 23% increase on investment intentions in Q1 2012. The figures highlight a move to upgrade existing equipment in order to enhance efficiency and productivity, whilst also indicating a clear response to increasing missed income or new business opportunities, also revealed by the survey. Results also predict a significant boost to UK employment, with UK SMEs planning to take on staff in much higher numbers compared to the start of the year.
The research shows UK businesses are posting the greatest increase in planned spend when comparing current investment intentions to those recorded in Q1 2012. German and Italian SMEs both post double digit decreases in capital expenditure intentions -- whilst investment intentions in France are more in-line with the UK, rising nearly 20%.
In addition, estimated losses in income due to out-of-date or inefficient equipment have increased more in the UK than in any other market, up 51% compared to a rise of 16% in Germany, and falls of 8% and 23% in Italy and France respectively. This means that UK businesses have lost out on a total of £14bn in net missed income over the last 12 months.Other top-line findings include:
- Almost two thirds of UK SMEs (65%) state the principal reason for investing is to upgrade existing equipment to enhance efficiency and productivity
- 8% fewer UK respondents in Q3 say the need to build cash reserves is restricting their ability to invest
- Business confidence has dropped, with UK SMEs reporting a net confidence of -10%, down 5.1% on Q1. Smaller businesses (2-9 employees) are most pessimistic
- More than two in five UK SMEs (44%) cite the uncertain economic environment as the main factor restricting investment, albeit 4% less than in Q1 2012
John Jenkins, Chief Executive of GE Capital UK said: "After a period of under-investment brought on by broader economic uncertainty, it's good to see UK businesses once again looking to increase investment in capital expenditure and creating new jobs. In particular, a drive to modernise and upgrade equipment should spark a corresponding increase in productivity. This is a welcome sign for the UK economy and will provide a boost to wider economic recovery."
The report indicates that European SMEs are planning to keep investing in manufacturing equipment at a similar level as reported at the beginning of the year, whilst increasing investment in IT, commercial vehicles and office equipment. Across all four economies, nearly half (47%) of all intended capital expenditure is earmarked for manufacturing equipment. A 34% increase on Q1 investment intentions is expected in IT hardware across the UK, Germany, France and Italy.
Michael Goodbody
GE Capital EMEA
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