Business Planning: Private lives
Privately- and family-owned businesses are thriving - we must not overlook their needs.
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A mid all the gloomy reports about the scale of the UK's debt and the public sector spending cuts, you could easily have missed the fact that the UK economy has gradually been moving out of recession.
Since the end of 2009 we have seen a return to modest but sustained growth in the UK's gross domestic product (GDP), all the more striking when you recall how many commentators were predicting that recession would turn to depression during the darkest days of 2008 and 2009. The question is can this recovery be maintained in the face of massive UK and global public sector spending cuts? PwC's own economists, known for their cautious but generally accurate predictions, think the answer is yes and have forecast GDP growth of around 1.8 per cent in 2010 and 2.0 per cent in 2011.
While much attention has been focused on the impact of the recession on the public sector and the prospects for recovery in the largest multi-national companies, there has been very little profile given to the UK's privately, often family, owned businesses. The significance of these businesses in the UK is often overlooked. With more than 9.5 million employees, they are a potent force within the UK economy, employing more people than all of the FTSE companies combined and account for over 30 per cent of GDP and 15 per cent of the government's total tax revenues.
If the UK economy is to recover, then privately-owned companies need to play their part. Over the past few months, PwC has been talking to the people leading more than 100 private businesses from around the country to gauge their views. We found some surprising results. The vast majority have successfully weathered the recent economic storm and held their nerve to invest for the future. Almost 70 per cent said that they had maintained or increased their profits over the past year. And more than 60 per cent told us they are planning to grow their business in the coming twelve months. Most publicly owned business face the difficulty of borrowing the money to fund investment but we found that nearly 70 per cent of the privately owned businesses have accumulated cash to fund their growth ambitions.
But one point I've been making to politicians and civil servants is that the UK's economic outlook remains fragile. We can't take a return to growth for granted. As we rightly tackle the UK's historically high debt levels and reduce public sector spending we need to do so in a way that supports and nurtures the entrepreneurs in our society. Keeping our economy moving forward depends on it.
Ian Powell is PwC’s chairman and senior partner