By Daniel Hunter
The total amount of money UK companies had in the bank fell by 25% in the 12 months from 2013-14, according to new research carried out by Company Check into the state of UK business following the financial crisis.
On the back of news that the UK economy grew by 0.7% in the second quarter of 2015, the data shows that firms held a total of £1.9 trillion in 2014, down by a quarter from £2.5 trillion in 2013.
The research, which investigated national business performance over four years from 2010-14, analysed cash at bank, assets, liabilities and net worth of all businesses filing accounts in the UK each year.
Total cash at bank was found to have risen year-on-year for four years from 2010, from £1.5 trillion to £2.5 trillion in 2013, before the fall last year.
Meanwhile, the average cash at bank per company, which allows for fluctuations in the total number of businesses each year, was found to be £313,575 in 2014, 25% lower than 2013 (£421,769) and 35% lower than 2012 (£478,488).
Alastair Campbell, founder of Company Check, said: “This 12-month drop that we’ve identified suggests a significant shift in business behaviour. Less money in bank accounts means more is being spent somewhere, either in investment in capital expenditure, job creation or paying off liabilities as confidence keeps rising.
“As the years from 2010-13 show, many businesses had been choosing to hold on to their money rather than putting it back into the economy for fear of future economic bumps, despite historically low interest rates persisting. Last year however, that all seemed to change and total cash at bank fell.
“So did total liabilities, which dropped from £33 trillion to £25 trillion, numbers which suggest firms are choosing to get their house in order now the economic conditions look more favourable. For those businesses that managed to weather the storm of the financial crisis and emerge relatively unscathed, overall it seems the future’s looking bright.”