Regus, the global workplace provider, has published its latest Business Tracker report including an updated Business Confidence Index (BCI), based on the opinion of over 4000 businesses in the UK. The report reveals that business optimism stands at its highest point since October 2009 - 108 points - but highlights the confidence chasm between small firms (103 in the Index) and large (125).
Rising confidence is being matched by real results: a net 38% of UK companies' revenues have risen in the last year, and 31% saw their profits rise. However, significantly lower proportions of small businesses chalked up profit rises compared to large firms (26% and 51% respectively, see Table 1). Across all size brackets, the UK lags the US and all other major world economies according to each of the Business Tracker's indicators.
UK companies remain cautious in their forward projections: over a quarter (27%) expect the economy to advance strongly in the second half of 2011, yet 60% do not expect momentum to pick up until the first half of 2012. 69% of companies expect revenue growth in the next 12 months. The forward-looking indicators of the report are roughly consistent across all size brackets.
Investing in Growth
The Business Tracker also investigated where companies are planning to channel their budgets in the next 12 months. Departmental spend is predicted to rise in sales and marketing, product development and customer service but not in HR or property. Internationally, it is noticeable that a greater than average proportion of UK firms expect to freeze or cut their property spending. This matches other research studies which reveal a general trend towards lower cost working practices.
Celia Donne, Regional Director at Regus comments: "That business confidence is returning is good news for the UK economy as is the fact that so many companies are reporting rising revenues and profit. Although the Business Tracker highlights the extent to which small business is bearing the brunt of the weak economy, it is encouraging that their profit expectations are as buoyant as their large counterparts. It seems unlikely that recovery will really gain momentum until 2012.
"All firms are remaining cautious in respect to departmental spend. It would seem that they are only investing where there is a clear bottom line return, such as sales and marketing, whereas spending on property will continue to decline in 2011. This is a remarkable change on just a few years ago, when the combination of economic upturn and increasing employment would have generated a boom in traditional commercial property spending."
