UK SME capital expenditure lags behind

UK SMEs will invest less in their businesses over the coming year than companies in other leading European countries, research finds.

UK firms plan to invest a total of £74.9 billion in capital expenditure in the next 12 months, compared to €145 billion (£130.7 billion) in Germany and €101 billion (£91 billion) in France, according to a survey of 1,000 international companies by GE Capital.

John Jenkins, CEO of GE Capital says, ‘When compared to our findings in other markets such as Germany and France, where SMEs are looking to increase capital expenditure to a much greater degree, it’s clear that there is still room for improvement in the UK, particularly in supporting the smallest businesses with their plans for growth.’

While nearly all (96 per cent) UK small businesses (10-49 employees) plan to invest, micro businesses (2-9 employees) are more cautious with only 81 per cent looking to invest in the next 12 months.

UK companies are looking to modernise and update equipment after suffering significant lost revenue over the last 12 months as a result of outdated equipment. One in eight businesses (12.5 per cent) say they had lost out on new income or new business opportunities as a result of dated or inefficient equipment, having put off replacing it during the downturn. On average businesses have lost by £8,301 each, equating to £8.3 billion of lost revenue across the UK as a whole.

Almost one in five investments are being made to support new orders and new business opportunities, while 24 per cent are due to deterioration of existing equipment. The most prevalent motivation is to enhance efficiency and productivity (34 per cent).

Some 85 per cent of companies state that they are looking to invest a total of £8.6 billion in upgrading and replacing existing company laptops, servers and other hardware.

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