Contractors can expect an increasingly contract-rich environment as a surge in business confidence is resulting in UK businesses moving away from austerity and focusing on expansion as a top priority.
These are the conclusions of two key business surveys: Deloitte’s Third Quarter 2013 Chief Financial Officers (CFO) survey and the July 2013 English Business Survey.
“A new mood of confidence pervades the third quarter CFO Survey. Chief Financial Officers see fewer risks in the global economy and greater opportunities for expansion,” says Deloitte.
“Austerity is out and expansion is coming in. Cost control and cash conservation are moving out of favour. Expansion is, once again, the top priority for corporates,” it continues.
The English Business Survey confirms that firms have high expectations about future business and anticipate increasing headcount. “Businesses were particularly optimistic in London and the East Midlands,” reports the survey, which notes that large companies are the most optimistic.
The positive growth ambitions of the UK’s larger companies spell good news for contractors as projects put on hold or postponed are restarted. What is also encouraging are the signs of new projects starting, which have been trail blazed by a surge in marketing spend. Deloitte shows 40% of CFOs prioritising new products and services over the next 12 months.
The upswing in marketing activity is shown by the latest Institute for Practitioners in Advertising (IPA) Bellwether Report 2013 Q2 from the summer. More recent quarterly Advertising Expenditure Forecasts from ZenithOptimedia, are an additional indication of new product and service launches.
The Deloitte and English Business surveys also show that companies have increased capital expenditure. “Large businesses were the most likely to have invested in capital with 41% stating they made new investments in the three months to July,” says the English Business Survey.
According to Deloitte “expectations for capital expenditure, hiring and discretionary spending over the next 12 months have hit three-year highs”. Capital expenditure means further projects that will require contractors as part of the implementation team.
Clearly, the contracting landscape will benefit from this increased activity and investment. The challenge for contractors is to profile the companies investing during the early stages of the recovery so they can identify and win contract opportunities at an early stage.