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Business investment plans upwardly revised

Posted at July 16, 2015 | Categories : News

New research from Markit suggests that an improving economic outlook, new product developments, investments in additional capacity and expansion into new markets are among the factors set to support UK business over the coming year. Meanwhile, uncertainties related to the Greek crisis, the UK’s EU referendum, government spending cuts, higher interest rates, skill shortages and a strong pound remain among the key worries for businesses.

According to the study, employment in the UK private sector is expected to increase over the next 12 months and firms have been revising their investment plans higher. Spending on both capital equipment and R&D is set to increase at faster rates than expected.  

The latest results also suggest a pick-up in price pressures across the UK private sector over the next 12 months. Service providers expect the sharpest increase, ahead of constructors and manufacturers, with increased staff costs set to be a key driver.

Jack Kennedy, senior economist at Markit comments: “Companies have … become more positive in their hiring intentions, spelling good news for the labour market and suggesting that unemployment will continue to fall over the next year. However, this is accompanied by signs of rising pay pressures, linked to skill shortages. The Bank of England will continue to keep tabs on this, although interest rates are unlikely to start rising while inflation remains low and uncertainty surrounding the European situation persists.”