Small Business: The Saviour of Business Investment?

By Simon Morris On Thursday, March 06 th, 2014 · no Comments · In , ,

A survey by the Manufacturing Advisory Service (MAS) has highlighted a trend that suggests that small businesses could be the vehicle on which a long hoped for upturn in business investment is carried, as we enter the next fiscal year.

The survey found that nearly nine out of ten small to medium sized manufacturing firms hold plans to invest in a range of capital equipment throughout 2014. This would provide the long sought upswing in the business investment market that experts have long been hoping for.

Specifically the survey questioned figures from over 850 SME’s. These questioned figures from the survey reveal that companies hold hopes of spending on average £121,000 this year. Experts have concluded that such a rate of business investment could indicate the injection of millions of pounds into the national economy.

Furthermore two thirds of those companies surveyed designated these funds for the purchase of plant and machinery and over half stated they expect to allocate funds to the upgrading of their IT systems. In addition a solid third of those firms surveyed indicated that funds would be allocated to renovation of their premises.

One company surveyed was not shy about how these funds had been and will continue to be allocated. Having turned the car manufacturing boom to their advantage, Cab Automotive, a motor components manufacturer in Tipton, West Midlands, has won £7 million in new contracts.

They have now invested £4 million on a new production line and the latest equipment and expect to double turnover to £40 million from 2012. This just shows how manufacturing companies are grabbing the opportunities to expand through investment with both hands.

Across the board business investment still sits roughly a quarter below the levels recorded for the pre-recession era, however it is rising. Furthermore the Bank of England has now predicted a resurge in this area of 11.5% growth from the 3.25% recorded last year.

Steven Barr, head of the MAS went on record commenting just why investment holds such a pivotal role in the current economy. He said that “investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles.”

Clearly MAS have highlighted a growing trend. It appears that as the current fiscal year unfolds small businesses are the vehicle which will drive business investment growth. Furthermore the emergence of barely tapped industries such as renewable energy could drive this growth so that it eclipses pre-recession levels.

Simon Morris

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