Almost nine in ten members of the Institute of Directors (87 per cent) expect UK GDP growth to be higher in 2014 than in 2013, with 74 per cent predicting higher revenue in 2014, 58 per cent higher profitability, 41 per cent a higher level of business investment and 41 per cent higher employment in their organisations.
The proportion of directors feeling confident in the outlook for their own organisation has consistently been higher than the proportion expressing confidence in the outlook for the wider economy. However, confidence in the wider economy increased at a much faster rate over the course of 2013.
Reflecting this surge in national optimism, chairman of the West Midlands IoD Jason Wouhra said: “We are delighted to be starting the New Year on such a positive note which is very much supported by our membership here in the West Midlands and this is being reported right across all sectors from manufacturing to service industries. We are also very pleased to see an increase in our own membership which is another positive sign of confidence. There is still much to do but we enter 2014 with renewed vigour and purpose.”
IoD members grew significantly (and consistently) more optimistic during 2013, with 55 per cent of directors now having high confidence in the UK’s economic outlook compared to just 7 per cent with low confidence.
The proportion of IoD members expressing a high degree of confidence in the outlook for their own organisations has grown over the course of 2013, increasing from 48% in Q1 to 63% in Q4.
On the key measures of performance (business revenue, profitability, investment and employment) directors are more confident about the outlook for the year ahead now than they were 12 months ago. When the same questions were asked of members at the end of 2012, just 51 per cent were expecting a GDP rise in 2013.
|Indicator||Q4 2012||Q4 2013||Increase|
|Expect higher revenue over next 12 months||58%||74%||+16|
|Expect higher profitability||47%||58%||+11|
|Expect higher levels of investment||29%||41%||+12|
|Expect higher employment in organisation||32%||41%||+9|
The survey results suggest a continuing improvement in business operating levels, with 56 per cent of members’ organisations operating either at or above capacity compared with 42 per cent currently operating below capacity.
Commenting on the survey results, the IoD’s Chief Economist, James Sproule, said:
“Our survey is another sign that the economy is indeed recovering. While the view of the IoD is that economic expansion remains too dependent upon consumer spending, funded in large part by shrinkage in the savings rate, the fact that 74 per cent of businesses are anticipating higher revenue does point to a welcome broadening of economic growth.
“It is the broadening of the base of the recovery that is going to be the best guarantor of continued economic expansion. In line with this desire for a more widely based recovery, the Government is clearly eager for business to start spending its accumulated reserves.
“British businesses have worked hard to repair the financial excesses of the last few years and, despite encouraging signs of economic growth, 59% of IoD members are not anticipating an increase in business investment this year. The key to encouraging longer term business investment remains a positive business climate, including low taxes, light regulation and a positive outlook on profit and entrepreneurism.”
IoD members were also asked for their view on the likelihood of the Bank of England’s Monetary Policy Committee raising interest rates during 2014. Opinion was divided.
46% of directors thought it likely or very likely that the MPC would raise interest rates, whilst 33% thought it unlikely or very unlikely.
The survey was conducted between 20 and 27 December 2013 using the IoD’s award-winning online survey panel, Policy Voice. 818 IoD members took part in the survey. A full breakdown of the survey results is available on request.
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