Business investment on the up

Business investment could be set to return to levels last seen before the financial crisis hit – a major factor behind Britain becoming the fastest growing economy in the G7.


Leading accountancy agency ICAEW said it expects investment to grow by 7.1% in 2014, a massive increase on the levels on November’s forecasts of 5.5%.


It would suggest that the sense of optimism surrounding the economy – and the surge of confidence that has occurred as a result –is finally being translated into money.


Meanwhile the UK growth forecast has risen to 3.3%, up from 2.9%, which would list Britain as the fastest growing G7 economy.


If the forecasts are right, then it would mean the UK is outperforming the United States, Canada, France, Germany, Italy and Japan.


Business investment has been closely tied to the economic recovery, with Chancellor George Osborne saying that only a rise in investment and exporting would represent a sustainable recovery.


 “For some time now there have been lingering doubts about the strength of the recovery and whether we were experiencing a false dawn based on consumer spending,” said Michael Issa, chief executive at ICAEW.


“These figures go some way to allay those fears. Businesses are finally feeling confident enough to commit to an increase in investment at a rate we haven't seen since before the financial crisis took hold.”


For companies who chose to consider their business turnaround options throughout the recession, the latest trends justify their decisions in instances when trading did not cease.


The latest forecasts are in line with the latest projections from the CBI and Bank of England where investment growth of 6.6% and 11.5% is expected respectively in 2014.


Revisions to the investment forecasts suggest growth across four consecutive quarters, something that has not occurred since 2007.


However, despite the widespread positivity in the investment market, levels remain 20% below their pre-crisis peak suggesting there is yet more to come.


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