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The UK’s Growing Economies

Economics / UK Economy Jul 16, 2015 - 07:08 AM GMT

By: Boris_Dzhingarov

Economics

Since the Economic Downturn in 2008, economic adjectives have been ubiquitous and we hear and read daily of an ailing or buoyant; expansionary or inflationary; bullish or recessionary economy. Optimistic or pessimistic perspectives on economic matters are often a result of one’s portfolio or even their political leanings and, consequently, many people are influenced by Medias need to define an economy as ‘In or Out of Recession’. Often the accepted formula of two consecutive quarters of negative economic growth or contraction in a sector fuels their abysmal report. Others such as Chief Economic optimist Joe Grice of The Office of National Statistics (ONS) see no statistical basis to characterise the economy as recessionary. He states, “Overall, in recent years, the economy appears to have been on a bumpy plateau, with an upward trend but at well below historic growth rates.”


Services Sector Leads Economy

 
Some key points the ONS reports in their Economic Review, released February 4 2015, are robust growth in services and that the GDP “...growth of 2.6% in 2014 was the strongest calendar year figure since 2007.” An overall view of economic sectors is crucial for gauging and forecasting the best opportunities for investment. Many market indicators are finding investors optimistic in many sectors after the first quarter of 2015.

Business support services are a leading contributor to the Gross Domestic Product in the UK and are a key factor in its prosperity. To maintain and improve the GDP, businesses selling professional services are busy staying on the cutting edge of ever-expanding technologies e.g. marketers are expanding to include agile marketing services. As such, these changes are necessary if businesses hope to meet the growing demands of developing clients.

The Confederation of British Industry’s (CBI) May 29 2015 release of their Services Sector Survey reveals that:

  1. 28% of firms are more optimistic than three months ago.
  2. 39% of firms report increased profitability.
  3. 49% of firms report increased business volume compared to three months ago.
  4. 31% of firms are reporting increased staff levels over three months ago.

Trends In Acquisitions

 
Investors in business services companies have watched the growth of Advanced Computer Software Group Ltd. since 2008, as a series of acquisitions and a profitable business plan has made them a solid leader in IT Business Services in the UK. The growth and development at ACS Group caught the attention of many acquisition firms, until the recent buyout by American based Vista Equity Partners that is. It was reported, this past March, that ACS Group shareholders would receive 140 pence per share in a ₤750 million deal. However, ACS Group is not in a position for further investment and development into its business in this next stage of growth, reinforcing its ambition to be a major global player beyond the UK. In 2014, Advanced Computer Services won PwC’s UK Tech Award for Tech Company of the Year, but was also recognised as one of the Deloitte UK Technology Fast 50 companies.
 
Mergers and Acquisitions involving UK companies are at historic lows, even despite quarter-on-quarter volatility. Domestic acquisitions are at the lowest levels since recording began in 1969 with 28 completed Domestic Acquisitions in Q1 of 2015.

Hopeful Sectors

 
The falling price of oil should garner a positive impact on companies with significant energy input costs such as logistics, airlines, manufacturing and industrial businesses. The United States imported ₤32 billion of UK manufactured goods in 2013 and, with PwC forecasting Real GDP Growth in the United States at 3.2% in 2015 and 3.1% in 2016, it is safe to expect stability and growth in manufacturing exports for UK companies.

KBS Corporate has also been a part of the UK’s growing economy, catering its contribution by assisting capital investors with business acquisition services.

By Boris Dzhingarov

© 2015 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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