Business leaders say UK’s ailing infrastructure is restricting return to growth
New research reveals that business leaders overwhelmingly believe the state of UK infrastructure is restricting economic growth nationally, locally and within their own organisations.
The survey by leading audit, tax and consulting firm RSM revealed that nearly 70% of the 400 UK middle market business leaders questioned believe the UK’s infrastructure is hindering economic growth nationally; 64% said it is impacting the local economy in which they operate, and; 63% said it’s hurting their business.
Businesses are also increasingly taking matters into their own hands with nearly 80% saying they will most likely invest in their own infrastructure in the coming years.
Joe Brusuelas, chief economist at RSM, comments: ‘UK businesses have identified infrastructure as the critical nexus of UK economic revitalisation in the post Brexit and pandemic era. This survey illustrates just how important infrastructure modernisation is to both the rebalancing of the national economy from an over-reliance on the City of London and the entire Levelling Up agenda to create an equitable and sustainable domestic economy.’
Kelly Boorman, partner and construction industry analyst at RSM UK, comments: ‘Business leaders are telling us that their economic growth is being held back, and so the need to strengthen, bolster and expand the UK’s infrastructural capacity is now a priority. Our survey findings send a clear message to government that middle market businesses are ready to invest and innovate. How brave firms choose to be with their capital expenditure and digital investment will depend not only on the sectors in which they operate but their agility in the way that they adapt and prepare, and also on how far government is willing to go to incentivise and support them.’
Despite the keenness to invest, funding remains a significant challenge with a third (29%) of businesses saying it would be difficult to access the finance needed to realise their ambitions.
The survey also highlighted that UK businesses are arguably facing even greater challenges than their US counterparts. In a similar survey by RSM US in May, 63% of US business leaders said the nation’s infrastructure restricted growth nationally, 60% said it restricted growth locally and 54% said it held back their own business. Whilst the US findings help validate the need for Biden’s administration recently announcing a $1.2tn Infrastructure Bill, the UK sentiment suggests a much more acute challenge.
However, there is a belief from nearly three quarters (74%) of businesses that there will be meaningful action from government in the next three years which will result in tangible national infrastructure enhancements.
Alistair Hynd, partner and head of project finance at RSM UK, said: ‘government has stepped in to cushion the impact of the pandemic on businesses, but a full bounce-back will need more stimulus as restrictions ease. Infrastructure investment is a tried and tested means to stimulate economic growth, business development and job creation. Government must prioritise projects that are already in the pipeline, especially smaller scale projects that can be delivered on the ground in volume. Ultimately this will determine whether businesses’ confidence in government intervention is justified. Either way, the middle market will play a critical role in the UK’s economic recovery, and so policymakers could do well to heed these latest findings.’
The survey was the third in The Real Economy series of topical quarterly surveys focusing on the middle market as the powerhouse of the UK economy. It was also used as a means of uncovering the infrastructure challenges faced during the global pandemic. The Real Economy is the first authoritative source of economic data from this crucial area of the UK business market, sharing insight and perspective for the wider economy
