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Deloitte: Financial firms to splash out

10/04/14

The UK's biggest businesses - including a number of financial services providers - are set to offer the British economy a major boost over the coming two years, investing cash into recruitment and infrastructure.

According to Deloitte, these companies are set to invest up to £200 billion in the period up to 2016 as they attempt to compete with their global rivals and respond to the improving economy.

However, the resurgence of business investment will be phased as some companies use cash for other purposes. Some 50 per cent are hoping to return money to shareholders, while 11 per cent hope to add further to their balance sheets before creating any further expenditure.

Deloitte UK chief executive David Sprout said: "Over the last 12 to 18 months the steadily improving economy has led to an increase in corporate risk appetite. However, that has not yet translated into the level of investment policymakers had hoped for."

In 2013, companies in the country invested only £3 billion more than they had done in 2009, despite the fact that the overall economic situation had strengthened considerably.

"A well-balanced recovery requires a significant rise in corporate investment and a shift away from consumer-led growth. This investment is much needed," added Mr Sprout.

Healthcare, telecommunications and chemicals companies appear set to lead large-scale investment for 2014, but moving into 2015 the biggest spend is likely to come from businesses in the financial services sector, along with consumer-focused firms.

Only 26 per cent of listed companies are likely to invest over both years, while non-listed firms are planning to focus their outgoing throughout either 2014 or 2015.

Organic growth looks set to be more popular - 56 per cent are planning to invest in this area, while the remainder are preferring to concentrate on non-organic growth.

MP Danny Alexander, chief secretary for the treasury, echoed Mr Sprout's enthusiasm. The government is hoping to aid the growth of business by cutting red tape and reducing corporation tax, he added.

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