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Friday
Apr232010

Will Short Term Improvements Lead To Long Term Growth?

According to a new report released in the last few days, UK companies are feeling more optimistic about the future than they have in the last four years.

While I think it is good to see renewed levels of confidence after a recession that took a severe toll on UK companies, I feel it is important to delve deeper into the results this survey presents us with.  More than 11,000 companies were surveyed in order to get these results, and the companies came from all kinds of business areas.  We can see then that this provides a wide ranging and relatively accurate view of UK business as it is at the moment.

Output was clearly up on previous levels, and I’ll agree this is certainly good news.  But as the report goes on to state, a lot of businesses put a hold on replenishing their stocks during the recession.  They cut back on outgoings in order to keep going during a time when finances were uncertain.

Now those times are over we will see more and more businesses starting to add to their stocks once more.  It is this action which has led to better output in recent months.  But as we know, short term increases in output are very different from long term ones.  The report points out that for a long term improvement to be made long term investment needs to be pumped in.

I feel there is something of an impasse going on at the moment.  With the UK general election due to take place in just a few short weeks from now, we are all in limbo until then.  I think this is the main reason no one is looking confidently to the future.  Regardless of how you feel about a change in government, advisors here at St Matthew can help you look ahead.

 



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