UK private companies more optimistic about their business and
speed of economic recovery
Optimism among UK privately held businesses (PHBs) on their
economic outlook for 2010 has dramatically increased over the
last year, according to the latest International Business Report
(IBR) survey from finance and business advisors, Grant Thornton UK
LLP.
The optimism of UK
PHBs (unlisted companies including family businesses,
entrepreneurial and SMEs) rose to a positive percentage balance* of
16% this year, an increase of 63% from the -47% recorded a year
ago. Revenue expectations also increased this year with 58% of PHBs
expecting revenues to increase in 2010, compared to only 37 % that
expected revenues to increase in 2009. In addition, only 10% expect
their revenues to fall this year compared to 27% that expected a
fall in revenues last year.
According to the survey of 500 PHBs, profit expectations are
also buoyant. 55% of the private companies surveyed expect their
profits to increase this year, in stark contrast to the 28% of PHBs
last year that anticipated their profits would rise. This year,
only 17% of PHBs expect to see their profits fall and 26% expect
profits to remain the same. This is also significantly more
optimistic than last year's response where 37% expected profits to
fall and 33% expected profits to remain the same.
PHBs are also upbeat regarding expectations for a recovery in
the economic climate. According to the survey, 40% of PHBs expect
to see an upturn in the 2nd half of 2010 while 20% expect an upturn
in the 1st half of 2010. 10% think an upturn has already happened
and 20% expect an upturn in 2011. Only 5% believe the upturn will
not come until 2012 or later.
In preparation for the upturn, UK PHBs have put an increasing
focus on the skills of their current workforce. When asked to
select more than one option, 55% of respondents pointed to skills
of the current workforce as the being the highest priority followed
by new target markets (54%) and new products and services
(46%).
The survey also revealed that half of UK PHBs (49%) expect
stable employment levels in their business over the year. 34%
expect employment levels in their business to increase in 2010 and
only 16% expect employment levels to fall.
Stability is also expected in the prices sold for goods and
services this year. According to the report, 54% of PHBs expect
their selling prices to remain the same in 2010. Only 15%
expect their selling price to decrease while 28% expect an increase
in their prices for goods and services sold.
David Campbell, Head of Privately Held Businesses and Regional
Managing Partner says: "The increase in optimism of private
companies in the UK strongly indicates belief that the turbulence
in the economy is, for the most part, easing. Privately held
businesses seem to be experiencing the effects of a stabilisation
in the financial markets. This appears to be translating into
positive expectations for their profits and revenues, stability in
prices for goods and services and consistency in employment levels
within their firms.
"Many private companies in the UK had adopted strategies to ride
out the recession and are able to project forward with greater
confidence. However, the risk of trading problems manifesting
themselves in an upturn is just as realistic as in a downturn, so
there is no room for complacency to creep back in to business
practices.
"According to our survey, privately held businesses are
expecting the recovery to gather pace as the year progresses. It is
therefore imperative that they continue to pay close attention to
strategies that boost profits, revenues, and market share, but also
that they pay close attention to cash flow. It is pleasing to
see companies have indicated a strong focus on the skills of their
workforce in this survey, and that continued investment in people
is a cornerstone of the UK privately held business philosophy".
For further information, please contact:
Stephanie Aneto, Grant Thornton press office. Tel: 020 7728 2940 or
email: stephanie.aneto@gtuk.com
*The percentage balance reports the percentage of respondents who
reported a figure rising less the percentage who reported it
falling.