By Daniel Hunter

Businesses are refusing to invest with growing uncertainty ahead of the general election, according to Institute of Chartered Accountants in England and Wales (ICAEW).

The survey of 500 businesses found that 62% are sitting on a bigger cash surplus than last year, but just 32% are using it to invest in growth. Thirty-eight per cent said they are neither considering nor starting to invest.

Seven in ten said increased confidence in their business prospects would encourage them to invest, but 52% indicating that they refused to invest because of the uncertainty surrounding the outcome of the general election - they said they'd be more likely to invest if they had assurances over the long-term direction of the UK's economy.

Stephen Ibbotson, ICAEW Director of Business, said: “The results suggest that businesses have learnt their lessons from the 2007 financial crisis. We have seen business investment slow down, and firms are now sitting on their cash and waiting for the right opportunity. And those who are looking to invest are doing so in their staff to retain them, rather than on plant and machinery.

“This should be commended — businesses are getting their houses in order. But we don’t want to see firms just battening down the hatches, which could stop our recovery in its tracks. The next government should make it a priority to confirm the new rate of the Annual Investment Allowance as soon as possible. Businesses plan long term and waiting until December’s Autumn Statement isn’t quick enough. This will provide our growing firms with the confidence and impetus they need to take themselves and our economy to the next level.”