The UK economy will struggle to get out of the doldrums until major corporations begin to invest cash again, an economic forecasting group has claimed.
The Ernst & Young Item Club was not as positive about UK economic growth over the next year as yesterday’s IMF forecasts, forecasting just 0.4% growth in 2012.
Although it was noted consumer spending will slow, the biggest issues it sees is with corporate spending, as non-financial firms have accumulated £754 billion in cash but seem less willingly to spend.
Business investment was expected to rise just 1.3% in 2012, a similar pace to 2011.
Peter Spence, the Item Club's chief economic adviser, said of the news, “It is an inescapable arithmetic fact that the economy will not begin to prosper and the government deficit will not come back under control until the captains of industry decide to put back into the economy what they take out."
"It is now up to corporates to play their part in the UK's recovery,” he concluded.
In over ten years, Skipton Business Finance has funded businesses in a variety of ways and given access to funds that grow in line with their sales meaning that the solutions we provide are more flexible than a traditional bank overdraft. This means that the invoice finance solutions we provide, such as invoice factoring and invoice discounting, is the fastest growing alternative to a bank overdraft.