EEF's recent Business trends survey shows manufacturers continue to have strong intentions to invest despite the uncertainty on the horizon. The survey asks whether respondents are planning to increase or decrease investment over the next 12 month period.
A positive balance of 15% of respondents (those indicating they plan to increase investment minus those planning to reduce investment) indicates that in general investment plans are on the up.
Manufacturers came out of the recession with very strong investment intentions. While this has fallen somewhat since the high reached in the first quarter of 2011, the balance remains well above the series average.
Smaller firms are not as positive though…
The story below headline intentions shows that while businesses across the size spectrum have stronger investment intentions than the pre-crisis period 2004-2008, smaller firms are more constrained.
There are a number of factors at play here, and member companies and other organisations seem to agree that smaller firms have greater difficulty in accessing finance.
- Yesterday we spoke to a pre-revenue firm that is facing challenges to raise the finance they need. In the UK, late-stage venture capital is very hard to come by.
- A recent report into the new lending appeals process showed that 40% of appeals resulted in the banks original decision being overturned.
- The Bank of England's Trends in Lending survey also points to some constraint on SMEs – growth in SME lending has been negative since 2009 and has been lower than the lending to all public non-financial corporations since March 2011.
- There are also likely to be some demand factors at play here – some small firms may not know about the range of finance options available and some may be choosing not to invest in the current uncertain economic environment.