Firms ask too much of investments

Article Abstract:

A joint survey from the CBI (Confederation of British Industry) and the Association of Consulting Actuaries, has revealed that British companies are asking too much of the investments which they make. The rate of return is too high which in turn undermines the ability of industry to re-equip and reduce the productivity gap with competitors in other countries. Payback periods are much shorter than they are in Germany, while hurdle rates for major investments are 50% higher than they need to be. A possible consequence of high hurdle rates is lower investment. There is a possibility that companies would prefer speculative projects where the risk of failure is high, but returns are a lot higher too. Of the 300 companies surveyed the majority of them expected to earn an internal rate of return of 17% on average, and recover the cost of the investment in between two-four years. The poor investment rate of the UK is of some concern to both the CBI and the government especially as manufacturing investment continues to fall. It is smaller firms which set themselves the highest hurdle rates with an average of 24%.

Comment:

UK: Survey reveals that British companies are asking too much of the investments which they make

Securities and Commodity Contracts Intermediation and Brokerage, Securities & Investment Svcs, Investment services, Article

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UK: RURAL FIRMS FALL BEHIND

Article Abstract:

A new report from Cambridge University may provide the UK government with support for its theory that wealth is not just split between the North and South of the UK. The new report points to an economic divide between urban and rural areas throughout the UK, with small and medium-sized enterprises (SMEs) in rural areas reporting no employment growth in 1997-1999. This contrasts with a 6.9% increase in employment in small towns, 7.9% increase in large towns and 2.2% increase in cities. However, the report also confirms the North-South divide, finding that profit margins of SMEs in the south rose to 12.5% from 11.5% over the period, compared to a fall to 9% from 11% in the north.

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UK: BUREAUCRACY HINDERS NEW JOBS IN SMALL FIRMS

Article Abstract:

According to a survey carried out by Kingston Smith, the accountancy firm, more than two in five companies surveyed said that bureaucracy such as employment regulation and the working time directive was hampering their chances of growth. 92% of those questioned felt that red tape would only get worse in the coming year with the forthcoming Data Protection Act to worry about, for example.

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