Small businesses to cut investment

Britain’s smallest companies have scaled back plans to invest in their businesses, according to the latest Lloyds Bank Business in Britain research.

Companies with a turnover of less than £1 million expect to invest an average of £21,690 in their businesses in the next six months – a fall of 74% since July, when firms said they expected to invest £83,560.

Economic uncertainty was the most commonly identified threat over the next six months – cited by 31% of businesses – followed by weaker UK demand (17%) and political uncertainty (10%).

The fall in investment is in contrast with the amount of money firms invested in the latter half of 2016, with the average value of companies’ physical assets having increased by 25% to £169,870 now, compared with £135,630 last July.

However, the proportion of assets that businesses own outright remained broadly static during that period, with a slight dip from 88% to 87%.

Jo Harris, managing director, Retail Business Banking at Lloyds Bank, said: “By maintaining a high proportion of assets that they own outright, businesses build a strong capital position, providing a buffer to any economic shocks.

“Businesses need to be careful that in cutting back on investment to boost resilience they don’t put the brakes on too hard, and end up slowing their growth by not investing in new physical assets like equipment and stock.”

• Other key findings from the research include:
• Little more than a third of respondents are aware of invoice finance.
• Fewer than one in four are aware of trade finance.
• Even where there is better awareness of products, many companies are not taking advantage of them. While 60% of small businesses are familiar with Hire Purchase & Leasing, only 8% used it in the past year.