A majority of executives in FTSE 100 companies expect investment to increase this year, a new survey suggests.
Half of the 216 companies questioned said they expect business investment to increase in the next 12 months, according to the annual Reuters/INSEAD survey of UK business executives which was commissioned by asset manager Invesco Perpetual.
Less than one in four said they expect business investment to fall. This contrasts with the cautious outlook provided by UK central bank governor Mark Carney last week. Mr Carney said the economy was likely to grow by just 0.5 per cent this year, rather than the 2 per cent he previously estimated.
Out of 67 responses by FTSE 100 companies which took part in the survey, about 70 per cent plan to invest in either new plants and equipment (21 per cent) or research and development (19 per cent). About 40 per cent plan to spend money on expansion and 40 per cent intend to increase spending on people.
Amid a government-led plan to boost spending on infrastructure projects, the proportion of respondents planning to invest in new plant and equipment rose to 22 per cent from 16 per cent last year. The proportion investing in expansion rose to 24 per cent from 18 per cent.
The results are seen as a barometer of health for Britain’s construction sector, which was battered last year after the government pulled the plug on construction of the new £26bn HS2 high-speed rail link project.
Alan Manning, deputy chief executive of Invesco Perpetual, said: “Given the backdrop in the UK economy, [the level of confidence] should be seen positively.”
Meanwhile, almost half of the companies in the survey said that internal reorganisations were the biggest risk facing them. Less than a third said that competition from overseas could pose a threat. Only a fifth of companies surveyed said that a UK referendum on the UK’s membership of the European Union in June could have a negative impact on their business.
More than half of companies surveyed plan to continue with long-term working capital policies, with this figure ranging from 51 per cent to 90 per cent among investment grade companies.
Organisations that keep a disciplined approach to repayments account for the most positive attitudes, with the most positive survey results coming from companies with strong balance sheets.