Investment in business falls
Nov 24 2009
Businesses are continuing to put less back into their enterprises
Business investment fell in the last three months of this year, continuing the trend in enterprises ‘hunkering down’.
Investment back into businesses fell by 3 per cent in the third quarter, compared to the previous three months. This represents a decrease of £885 million from the second quarter, according to figures from the Office for National Statistics. Investment now stands at 21.7 per cent below last year’s level.
David Kern, chief economist at the British Chambers of Commerce (BCC), says: ‘The further decline in business investment highlights the challenges and risks facing the economy over the next few years. Despite this fall being smaller than in previous quarters, the persistent downward trend is worrying.
‘The government must remove all obstacles hampering businesses from maintaining and recruiting skilled labour, and from accessing the required finance to rebuild capacity.’
The manufacturing sector is estimated to have invested 9.5 per cent less since the previous quarter, while the biggest rise came from the financial sector – which posted a 27.1 per cent increase over the three months to the third quarter.
But many organisations believe that the figures are down due to a tightening in lending terms.
According to finance provider Syscap, some 90 per cent of small businesses believe that loan arrangement fees are excessive, while 75 per cent feel that the lending margins on loans are too high.
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