JUST over half of the UK’s finance directors (58%) expect to see modest growth (1%-2.5%) over the next 12 months, according to a survey of more than 100 FDs and CFOs.
But confidence in the economy’s growth prospects is significantly down on last year, when 58% of FDs expected to see either strong or modest growth. In contrast, those expecting either flat or negligible growth over the year have more than trebled from one in ten (11%) in 2014 to over a third (37%) in this year’s survey, published in CA magazine, the journal of ICAS, in partnership with law firm DLA Piper.
The depressed oil price was seen as the most critical barrier to growth for a significant minority of FDs, while skills shortages were rated the biggest barrier.
Meanwhile, staff recruitment and retention together with “controlling costs” and “growing revenues” were identified as the top three issues on the FDs’ personal agenda.
Weak confidence – among consumers and the business sector – is deemed another significant barrier to growth, as well as red tape and regulation, the slowdown in Chinese growth and uncertainty over the UK’s future in the EU.
The survey found that the majority of FDs believe the key to boosting economic productivity over the next 12 months is in the hands of businesses themselves, rather than being down to action on the part of government. Better employee motivation, improved business processes and more investment in training are cited as key measures to help improve economic productivity.
On a more downbeat note, the spectre of redundancy still looms large for businesses. More than one in four (28%) expect redundancies in their organisation during the remainder of 2015. This is up from the 19% that expected redundancies last year.
Controlling costs, growing revenues and staff recruitment and retention again surfaced as a trio of top priorities facing FDs. But the more prominent role of IT across business operations has seen cyber security and other IT issues shift up the priority list.
Some 91% of FDs said they had not experienced any reduced availability of bank finance in 2015, an improvement from 89% in 2014. Bad debts nudged up to 34% compared with 27% last year, while 24% said they were experiencing “significant” downward pressure on prices – a significant change on the previous year (8%).