LONDON: Britain’s businesses have got their mojo back and are planning to increase investment this year, as their spirits pick up after months of intense caution following the Brexit vote. Research and development spending, investment in renewable energy and spending on robots is all set to rise, according to Bank of England research.
Manufacturing firms are more keen to splurge than at any point since late 2015, and services companies are at their most upbeat since the month before the referendum. That is because of extra demand from domestic and international customers, according to surveys carried out by the Bank of England’s agents, its network of officials monitoring the economy across the UK. High profile examples include Toyota which last week announced £240m of additional investment in its only UK plant in Derbyshire. Reflecting wider concerns over the economy’s long-term future, Toyota also said it wants the government to ensure tariff-free trade with the EU can continue post-Brexit.
Factories’ output for British customers is growing at an 18-month high, while the export picture is even stronger, expanding at its fastest pace since 2014. The fall in sterling is one factor behind that, as the weak pound makes UK goods relatively cheap for foreign buyers. The number of tourists visiting Britain as a result is also on the up, while more UK residents are taking holidays domestically instead of travelling abroad. At the same time the global economy is picking up pace, increasing demand for British goods. Rising investment intentions “pointed to modest growth in spending over the next year,” said the agents’ summary of business conditions. “The pickup reflected stronger demand and an easing in uncertainty around the likely returns of projects, particularly shorter-term plans.” “Firms had been going ahead with plans designed to mitigate increased energy, labour and materials costs. That typically entailed investment in technologies such as renewables, robotics, or enhanced business systems.
