ith interest rates now falling and the outlook for economic expansion improving, businesses across Britain believe they are in a strong position to grow. However, amid the optimism, concerns remain around high costs, skills shortages and the potential for further economic upheaval.
New research by Barclays Corporate Banking and News UK reveals that
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Even before this, many businesses were confident about their growth prospects. In the Barclays-News UK research, 57 per cent said they expected to expand over the next 12 months.
Still, companies in some parts of the country are more confident than in others. In the South East, for example, 53 per cent of businesses are optimistic to be planning investment in new strategies for growth during the next year.
“It is encouraging that more businesses feel able to capitalise on the improving economic outlook,” says Irana Richards, head of mid-corporate, London and South East, at Barclays Corporate Banking. “There are now opportunities to accelerate, particularly as the cost of finance starts to come down; partners such as Barclays can help businesses exploit those opportunities.”
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55 per cent of British companies now expect to be able to grow successfully.
Barclays supports businesses across the UK and its regional heads give insight into what is happening in their locales. “We can see some light at the end of the tunnel,” says Andrea Delay, head of mid-corporate at Barclays Corporate Banking. “Businesses have had to deal with so much, but they’ve shown remarkable resilience.”
Upbeat sentiments among business leaders are underpinned by a significantly supportive economic backdrop, with the outlook for the country getting stronger. In July, the International Monetary Fund upgraded its growth forecasts for the UK and, in August, the Bank of England’s Monetary Policy Committee cut interest rates for the first time in more than four years.
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By contrast, in the North East and North West, only 38 per cent and 50 per cent of firms, respectively, have similar plans for investment in growth. Business leaders in these regions are more likely to focus on difficult challenges.
Across the country, the legacy of two years of high inflation is the biggest obstacle facing businesses. Nearly half (47 per cent) point to higher costs as a cause for concern, with respondents in the North especially likely to consider them a concern thanks to energy bills and more expensive raw materials still causing problems.
Skills shortages are also an issue nationwide, with 44 per cent of respondents aware of the challenges they face in recruiting and retaining the staff they require to grow. This difficulty is pronounced in the East of England and in the South West; in both regions, 51 per cent of businesses are worried about recruitment and retention.
Resolving such concerns will be crucial if businesses are to take advantage of the improving outlook, says Steve Ainsworth, head of mid-corporate, Eastern region, at Barclays Corporate Banking.
“It’s encouraging that businesses are now looking to invest in talent,” says Ainsworth, pointing to the findings that many organisations are focusing on this area. In the East of England, for example, 78 per cent of businesses now have programmes in place to upskill staff. “Investment in the workforce will provide a source of crucial competitive differentiation.”
More broadly, nervousness about what lies ahead is beginning to dissipate. For example, while 37 per cent of businesses are still worried about the possibility of further economic instability, falling inflation and lower interest rates can only provide reassurance. In some regions, worries have already eased: in the West Midlands only 28 per cent of businesses are concerned about instability.
It’s not just that the cost of finance is falling but also that banks are ready to support businesses’ growth ambitions. “We are beginning to see demand for finance pick up again and we’ve definitely got an appetite to lend,” says Karen Thomas, head of mid corporate, Midlands, at Barclays Corporate Banking.
For businesses fearing that a lack of access to finance could hold them back, this should be heartening. Overall, 50 per cent of business leaders feel positive about accessing funds to enable growth, but 36 per cent worry this may be difficult. In Northern Ireland, access to finance is the challenge most commonly cited by companies that do not expect to expand over the next 12 months.
John Mathers, head of corporate bank, Northern Ireland, at Barclays Corporate Banking, is keen to relieve such concerns. “Northern Irish businesses are in a strong position to take advantage of the improving outlook,” he says. “We are definitely keen to support businesses as they work out how best to capitalise on emerging opportunities.”
In practice, those opportunities will be wide-ranging. Priority areas for businesses now include digital transformation, development of new products and services, and expansion into new markets.
Barclays’ Delay emphasises the value of working with trusted partners able to provide tailored support as companies pursue such goals. “We’re keen to build strong relationships with businesses on an ongoing basis so that we can really understand their ambitions and what will be required to achieve them,” she says.
Looking for big picture banking? Visit barclayscorporate.com/thetimes
55%
of British companies
expect to grow successfully
We are beginning to see demand for finance pick up again
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Growth mindset Attracting and retaining skilled staff is a key concern
Raring to go
Banks are ready to support businesses with their finance goals
of businesses have plans to invest in employee training on sustainability
65%
Encouragingly, businesses are now looking to invest in talent
What lies ahead Firms in some regions are more optimistic about the future than others
of UK firms
expect to expand over the next
12 months
57%
of businesses in the South East plan to invest in new growth strategies in the next year
53%
businesses in the East of England and South West worry about recruitment and retention
51%
of companies
in the East
of England have programmes in place to
upskill staff
78%
A better economic outlook means more than half of businesses expect to grow. How can they seize the day?
British firms can see the
light at the end
of the tunnel
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Encouragingly, businesses are now looking to invest in talent
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