Economy set to be less reliant on public sector
THE majority of businesses in the UK believe the economy will have less reliance on the public sector over the next decade but are yet to be convinced of the ability of politicians to reduce tax, red tape and the deficit, new data suggests.
‘Politics and the Economy 2021’, conducted by Barclays Corporate, polled 660 business leaders and asked for their views on the political conditions they expect their businesses to face in a decade.
It found that companies were resigned to the fact they would be dealing with more red tape and higher taxes in a decade.
In the West Midlands region, 79% of business leaders felt there will be more red tape with 68% believing the tax burden will be more in a decade.
However, businesses are also planning for a less public sector focused economy, with 59% of business leaders predicting the UK will be less reliant on the public sector versus just 26% who believe the economy will have a greater reliance on the public sector.
There is significant regional variation in attitudes to this, with South West businesses most confident of a move away from public sector reliance, compared with the North West which is on balance the only region expecting an increase in the influence of the public sector in the economy.
The vast majority of media and technology companies predict less reliance on the public sector as do the majority of healthcare companies. Conversely manufacturing is the only sector that believes there will be an increase in public sector reliance over the next decade.
Ray O’Donoghue, managing director, Barclays Corporate, said: “The fact that most businesses are looking to private enterprise for growth in the UK is welcome news. While central and local government is a key source of income for companies around the UK, these results underline the fact that relying on the public sector alone is not a recipe for success over the coming decade.”
UK businesses are divided on whether infrastructure and the state education system will be more or less able to support the needs of the business environment.
“With businesses divided over whether infrastructure and education will be fit for purpose in a decade, companies must be proactive in advocating what infrastructure investment and education policy they believe will best facilitate growth for their region in the coming decade,” added Mr O’Donoghue.
The research also found more than two thirds of British companies (64%) believed a budget surplus in the public sector will not be achieved by 2021, with the largest companies least confident of a surplus being generated.
