Large companies must invest to boost UK growth, says think tank

John Lewis shrugged off downbeat forecasts with a record week. Picture: PA
John Lewis shrugged off downbeat forecasts with a record week. Picture: PA
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BRITAIN risks falling behind rivals such as Germany and the United States if big companies do not start investing some of their near‑£730 billion cash mountain, warns Ernst & Young’s Item Club think tank.

The accountancy firm today claims that it will take until 2015 for businesses’ investments to return to pre-recession levels at the current rate.

Andrew Goodwin, senior economic adviser to the Item Club, said: “Slow and steady doesn’t always win the race. The UK is facing another two years of sluggish growth in business investment, sapping strength from the wider economy.”

The warning came as the CBI’s quarterly services sector survey today showed that consumer-facing businesses – such as bars, hotels and restaurants – continue to be cautious about the economic outlook for the three months ahead.

Department store chain John Lewis yesterday shrugged off the downbeat outlook for the high street by posting £109.6 million of sales in the week to Saturday, the first time its sales had broken the £100m barrier for a week in November.

Accountancy firms, legal practices and other companies in the business services sector told the CBI that they were more optimistic about growing their businesses in the three months ahead, as a report also out today from credit reference agency Experian revealed that insolvencies continued to fall in October.