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Expectations of growth have been strongly impacted by the banking crisis, with 80% of UK CEOs believing the current problems in the banking system will delay investment plans. 60% believe it will reduce the ability to enter new markets and almost half believe it will reduce the development of new products and services. This casts doubt on the idea that innovation will serve as a driver of growth, with a mere 15% in the UK, who believe that new product development provides a strong potential opportunity for business growth.
In terms of financing growth, more than three-quarters of UK CEOs said they expected to fund future growth from internal cash resources, with only a quarter expecting to fund growth through debt. This reinforces the importance of managing working capital and adopting strong financial disciplines. Surprisingly private equity has increased its standing from 2007 as a potential source of finance, and 16% of UK CEOs anticipate using this source, compared to only 9% last year.
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