By Dow Jones Business News,
February 24, 2014, 08:35:00 PM EDT
LONDON--A growing number of the U.K.'s small and medium-sized manufacturing firms are planning to invest in their
businesses, a survey showed Tuesday, as confidence in the economic recovery boosts their desire to expand and increase
But, while those plans to invest will be welcomed by the Bank of England, the U.K.'s high street lenders are unlikely
to benefit from any possible resurgence in borrowing, as many companies expect to take advantage of a variety of
government initiatives to fund their plans.
A quarterly report from the Manufacturing Advisory Service, or MAS, shows that 86% of the 864 respondents are planning
to invest in their own business over the course of 2014, with an average of 121,000 pounds ($201,199) expected to be
spent per firm.
"These figures point towards signs of a renaissance in manufacturing," the U.K.'s Business and Energy Minister Michael
Fallon said, referring to the survey results. "SMEs are increasing in confidence, and looking to both recruit and
Indeed, after several years of low investment levels--including funding new staff--the industry body's quarterly
report shows that 53% of firms surveyed are planning to recruit new workers over the next year.
The survey comes less than two weeks after BOE Governor Mark Carney underlined the importance of a recovery in
business investment in the U.K. to help underpin the sustainability of the economic recovery.
"What we haven't seen yet is business investment pick up," Mr. Carney said in an interview following the latest
Quarterly Inflation Report. "The key to this recovery sustaining itself is going to be around business investment."
While the MAS survey suggests that we could be seeing the beginning of a recovery in business investment, it is
unlikely to involve the U.K.'s banks heavily.
Just 19% of those planning to invest said they would approach the banks for funding for their needs. Meanwhile, some
11% are able to invest their own company cash, 27% said they would use a range of grants and 21% said they would
specifically tap the Regional Growth Fund.
The Regional Growth Fund is a government initiative which has made funds available for U.K. firms planning to expand
and increase their staffing levels over a series of stages until 2017.
The positive intent displayed by the record number of survey respondents comes as 62% of firms surveyed reported an
increase in sales in the second half of 2013. Looking ahead, 76% of firms said they are expecting a further sales
increase in the first six months of 2014.
"There is a definite feel-good factor around English manufacturing at the moment and these latest figures reinforce
positive reports from the Society of Motor Manufacturers and Traders together with encouraging Purchasing Managers'
Index data," said Steven Barr, head of MAS.
"Importantly, 6% of smaller businesses are looking to spend more than GBP500,000. This is a significant figure and
proves that SMEs are prepared to invest "big" in order to take advantage of opportunities presented by the upturn," Mr.
Write to Ilona Billington at email@example.com
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