British firms brace to unleash wave of investment in 2022

British businesses are preparing to unleash a wave of investment over the next year, reveals a fresh study published today.

A record proportion of finance chiefs at the UK’s top firms are intending on ramping up capital spending in the next 12 months, according to research carried out by consultancy Deloitte.

Over one in three chief financial officers (CFO) at Britain’s premium listed firms are intending on scaling investment to capitalise on red hot domestic and foreign demand.

Deloitte surveyed 85 finance chiefs at firms which have a combined market value of nearly £500bn, representing 19 per cent of the entire UK stock market.

Ian Stewart, chief economist at Deloitte, said: “Like equity markets, which rallied into the new year, CFOs seem to be looking past Omicron and plan to focus their businesses on growth in 2022.”

Over 90 per cent of CFOs intend to expand their technological capacity in a sign that the productivity gains made by the rapid adoption of digital tools since the onset of the pandemic are set to continue.

Finance chiefs expect their gamble on investment to pay off, with some 84 per cent forecasting it to yield productivity enhancements.

Britain spends around $43bn on research and development, representing 1.6 per cent of the size of the economy, more than India and Russia, according to figures from Unesco.

Firms are more optimistic about operating in a post-Brexit environment.

“Strikingly, the worries that dominated the risk list in recent years – above all Brexit and weak global growth – have dropped sharply down the risk rankings,” Stewart added.

However, Deloitte’s research indicates businesses are under intense pressure to survive amid a barrage of soaring costs and an ongoing labour squeeze.

Some 54 per cent of CFOs pinpointed spiralling inflation as a key risk to their businesses’ performance, while 58 per cent are sweating over persistent worker shortages.

Concerns about the impact higher inflation will have on the business environment chimes with separate research published by consultancy BDO today.

Optimism dipped over the last month, driven lower by the threat of inflationary pressures biting this year and the hit to consumer confidence from plan B restrictions to curb the spread of Omicron.

Kaley Crossthwaite, a partner at BDO, said: “Ongoing uncertainty around Omicron is providing a further blow to UK businesses which have already battled a string of supply chain issues, the threat of further covid restrictions and inflationary pressures this past year.”