Big corporations are cash rich. The 2,000 biggest companies by capital expenditure are sitting on a cash mountain of gross £2.6 trillion.
But they aren’t spending it on new rounds of capital investment despite all the talk of an economic recovery.
Standard & Poor estimate that such spending is likely to fall by 0.5 percent this year in real terms. This follows a 1 percent decline in 2013.
And in “emerging markets” such as China, Brazil, Russia and India, the rate of decline in capital investment is even faster, falling by 4 percent in 2013 with a similar decline likely this year.
One problem is that the largest 2,000 companies are also highly indebted. Globally, net corporate debt rose from £5.9 trillion in 2012 to £6.5 trillion in 2013.
“There was a lot of hope that a clear improvement in the economic cycle might trigger the second stage when companies feel more comfortable and start spending their cash,” Gareth Williams, corporate economist at Standard & Poor’s in London, told the Financial Times.
“For a variety of reasons this isn’t going to happen and it raises questions about the robustness of the recovery this year.”
In November of last year, there was a brief moment of light amid the darkness that was 2020. Scotland became the first country in the world to make period products free for all. Just as the weekend and the eight-hour-day are now regarded by many as a given, future generations may be in disbelief that...
On 4 November last year, when many of us were watching the aftermath of the American presidential election, the US formally left the Paris Climate Agreement. Written in 2015 at the United Nations’ COP21 climate conference in Paris, the agreement is often considered to be the most significant document of international climate cooperation. Back then,...
To say 2020 was dramatic would be an understatement. The world situation has been completely transformed by the Covid-19 pandemic and the inadequacy of governmental and state responses. As we head into 2021 it feels like we are entering uncharted territory. To make specific predictions would be unwise. But the Covid-19 crisis raises fundamental questions...