Falling capex puts UK plc at risk
UK companies risk falling behind their international competitors as they reduce their capital expenditure on equipment, and research and development.
UK companies are investing less in their capital expenditure than their international competitors, according to a study conducted by the Department of Trade and Industry’s Future and Innovation Unit,
The study shows that 38% of UK companies are reducing capex in 2000/2001, building on already significant reductions in capex in 1999/2000.
This could be potentially damanging to UK plc as the research showed that effective ‘capex and R&D expenditure leads to higher levels of profitability.
There are also positive correlation between capex and employee productivity and shareholder value.
Mike Tubbs, senior industrialist with the DTI said that, although the economy is slowing down, companies must keep up their investment in capex and R&D.
He added: ‘It is now more important than ever that companies sustain capital and R& D investment in new products and services which will ensure they are more competitive when the upturn comes.’
Links
Future and Innovation Unit website.