A new report by Siemens Financial Services (SFS) has shown an increase in business investment confidence across eight major economies, including the UK.
The SFS Business Investment Confidence Index, examines companies’ desire to invest in business equipment and infrastructure in 2011, and has been published every year since 2007.
In the UK, the index has increased from 62 in 2010 to 83 this year, indicating an expected rising level of capital expenditure amongst British businesses in 2011.
David Martin, general manager for Siemens Financial Services Ltd in the UK, said: “Even though the pace of recovery in the UK is not as strong as as Germany or France, the British economy is gradually picking up and businesses are becoming more optimistic amid signs of economic growth.
“Companies which have adopted austerity measures in the previous years are beginning to contemplate new investment in upgraded equipment and infrastructure to boost efficiency and productivity as well as maintain competitiveness.”
As credit conditions in the UK remain tight, if companies are to realise their business ambitions and meet the desired levels of investment, they will have to explore a number of other means of obtaining necessary development finance. These include, at the equipment level, various forms of asset finance such as leasing and renting; as well as project finance investment for larger facilities.
Such financing methods secure a predictable level of monthly payments, aligned with the actual efficiency and productivity gains resulting from the equipment investment, for the whole financing period, thus protecting companies from market and banking volatility. With technological innovations leading to ever increasing pace of technology replacements, asset finance arrangements also help avoid the accumulation of funds tied up in capital expenditure (“frozen capital”) over time by accommodating technology upgrades.