The findings of our survey, undertaken in June 2010, provide insights into longer term economic trends in business growth, globalization and the regulatory environment.
Growth expectations among UK businesses are higher than they were in 2009 – 80% of businesses say that they are planning turnover growth over the next two years – although plans for growth have not yet returned to the levels seen in 2008. The proportion of businesses planning growth rates of 11% or more per year (22%) remains unchanged from 2009. Globally-engaged businesses are more optimistic than those with a solely UK focus. Changing oil / petrol and energy costs have adversely affected competitiveness over the past year.
The proportion with operations, activities or trading relationships beyond the UK has increased from 64% in 2009 to 70%. UK businesses remain positive about the impact of continuing globalisation with increased access to new markets the most commonly mentioned benefit. More than 40% of businesses have international expansion plans, with Europe, China and India the main targets.
Around four in ten businesses based in the US, Asia-Pacific, the Gulf and Africa said they would consider the UK as a location for future investment in Europe. Within the EU only 20% held this view.
50% of UK businesses feel that the UK’s regulatory and taxation environment is business friendly, a significant improvement since 2009. Smaller businesses continue to feel less well supported but perceptions among medium-sized businesses have improved. Employment tax and legislation, business tax changes and health and safety regulations are most likely to be seen as a hindrance to the operation and development of businesses.
Overall, the main negative influences on businesses’ global competitiveness over the past year have been changes in access to finance, changes in the costs of energy and changes in the costs of oil / petrol.
Over the next two years businesses’ growth expectations have increased significantly compared with 2009 in all of the regions surveyed last year, with the exception of the Gulf. In all global regions surveyed, at least 80% of businesses are now planning turnover growth, but the proportion planning growth rates of 6% or more has not yet returned to the levels seen in 2008. Increasing profitability continues to be the key global business objective over the next two years. Close to half in nearly all regions say this is their key objective. Over the coming year, businesses are more likely to anticipate that the impact of changes in access to finance will be positive rather than negative. National government measures are the factor most likely to be expected to have the greatest negative effect over the next year in several regions.
The majority of businesses surveyed are active in international markets. At least 70% of globally engaged UK businesses and businesses in the other global regions sell to other countries and provide higher value-added products or services.
At least 60% of globally-engaged UK businesses and businesses in the other global regions believe that continued globalisation of markets will have a positive impact on their business over the next five years. Across many regions, two-thirds of businesses have international expansion plans for the next two to three years Among those with international expansion plans, most tend to look close to home when deciding where they plan to expand or increase market share. The Asia-Pacific region and China, in particular, also emerge as a key target.
Only around half of globally-engaged businesses in the UK and businesses in other EU countries view their domestic regulatory and taxation regime as business friendly, compared with over 70% of businesses in the US, Asia-Pacific and the Gulf. Half or more of globally-engaged businesses in the UK and businesses in other EU countries view employment tax and employment legislation as hindrances to their operation and development. In contrast, businesses in Hong Kong and Singapore are more likely to regard these issues as a help than a hindrance to their business.
Nearly 90% of businesses surveyed in Asia-Pacific are planning turnover growth over the next two years. Growth expectations have increased since 2009 in those countries that have previously been surveyed – Hong Kong, Singapore and Malaysia – but have not returned to the levels seen in 2008. Around a third of businesses across virtually all countries in the region have been negatively affected by changes in raw material costs. Around a third of businesses across virtually all countries in the region have been negatively affected by changes in raw material costs. Over the next year, national government measures are most likely to been expected to have a negative effect on businesses.
Businesses in Asia-Pacific continue to hold the view that continued globalisation of markets will have a positive impact on their business, especially those in Singapore.69% of businesses surveyed say that they plan to expand into, or increase market share in, other countries in the next two to three years. Most businesses planning to expand are targeting countries relatively close to home, most notably China. Businesses in Asia-Pacific are more likely to cite multiple barriers to international expansion than businesses in most other regions.
As in 2009, businesses in Singapore and Hong Kong are more likely than those in any other region either in or outside Asia-Pacific to say that their domestic regulatory and taxation environment is business friendly.
Over 80% of businesses surveyed in the Gulf are planning turnover growth over the next two years. The growth expectations of businesses in the Gulf have not increased as much as those in other regions. Among those regions that were included in last year’s survey, the Gulf is the only one not to show a significant increase in the proportion planning turnover growth. Businesses in the Gulf were more likely to say that their competitiveness had been adversely affected by changes in access to finance over the past year. They were also more likely to anticipate that changes in access to finance will have a positive impact on their business over the coming year compared with businesses in most other regions.
Businesses in the Gulf are more likely than those in several other regions to feel that continued globalisation will have a positive effect on their business over the next five years. 70% of businesses in the Gulf say that they plan to expand into, or increase their market share in, other countries in the next two to three years. Most businesses planning to expand are targeting countries close to home, primarily other countries in the Gulf and Middle East. They are more likely than businesses in other regions to target Africa.
Businesses in the Gulf are more likely than those in several other regions to have a positive view of the regulatory and taxation environment in their country.
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