UK Productivity and low interest rates
- By : Business Bob
- Category : Finance
I have a question…
We have low interest rates and therefore access to cheap money – businesses have enjoyed this benefit for years. We see reports suggesting businesses are doing well – look at the recent market highs – yet productivity is still very low, much lower than it should be, especially with the easy access to ‘cheap’ money!
My question is this: Why aren’t companies investing in their businesses to improve productivity? Are they following the bank’s ‘ring-fencing’ procedures to hold cash incase of another financial shock? Surely, by improving productivity businesses would better protect themselves from further volatility?
Where is the growth going to come from? Improving productivity would improve growth.
It’s also worth remembering that the FTSE100 is made up of many international companies and they report in dollars. When you look at the exchange rate and the weak pound you can see why the FTSE100 has done so well. What will happen when sterling recovers lost ground?
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