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UK Recession Is Catalyst For Decade Of Business Change -CBI
LONDON -(Dow Jones)- The severe recession in the U.K. will trigger changes in the way businesses raise finance, work with partners and suppliers, integrate ethics into their approach, and deal with their workforce, the Confederation of British Industry said Monday.
"We may be at the start of a new era for businesses," Richard Lambert, director-general of the CBI, said in a statement. "What we now need is a more balanced, less risky pathway to growth, one in which the short-term returns may be lower, b ut the long-term rewards for management success will be a lot more sustainable and secure."
In a report on the shape of business over the next 10 years based on a survey of 66 business leaders, the CBI said firms didn't expect credit terms to fall back to pre-credit crunch levels and would be looking for alternatives to debt-driven growth.
The survey, carried out by Ipsos Mori in October and November and sponsored by the CBI and business advisory firm Deloitte, showed 68% expected no improvement in credit availability next year.
It also showed that 50% of the respondents said they would use less bank debt, 44% would rely more on equity finance, and 26% said they would make more use of bond finance. Some 55% said they will now only tolerate a lower level of risk from gearing.
The CBI said companies will reorganize their approach to working with partners. Asked about supply-chain fragility during the economic recovery, only 24% said they were not concerned. Businesses said they were most worried about a unique supplier collapsing.
As a result, 68% said they would be strengthening the level of partnerships with suppliers in the coming years. One in three said they would be increasing the number of suppliers, and one in five said they would be offering finance to key suppliers.
Lambert said that although domestic banks were doing a good job of rebuilding their balance sheets, the process could take some time. He said he was especially concerned about the availability of finance for smaller companies that couldn't issue equity, bonds, or commercial paper at a sensible price.
Firms will seek to improve accountability to attract customers, and a more flexible workforce will evolve built on the spirit of collaboration between employer and staff that has developed over the recession, the CBI said.
"There are important questions around how businesses are going to finance growth and investment in the future," Lambert said. "And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm."
Web site: www.cbi.org.uk
-By Nicholas Winning, Dow Jones Newswires, +44 207 842 9498; nick.winning@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=b7jQAtaN3W7unU7%2FtxHPgQ%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 22, 2009 19:16 ET (00:16 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
"We may be at the start of a new era for businesses," Richard Lambert, director-general of the CBI, said in a statement. "What we now need is a more balanced, less risky pathway to growth, one in which the short-term returns may be lower, b ut the long-term rewards for management success will be a lot more sustainable and secure."
In a report on the shape of business over the next 10 years based on a survey of 66 business leaders, the CBI said firms didn't expect credit terms to fall back to pre-credit crunch levels and would be looking for alternatives to debt-driven growth.
The survey, carried out by Ipsos Mori in October and November and sponsored by the CBI and business advisory firm Deloitte, showed 68% expected no improvement in credit availability next year.
It also showed that 50% of the respondents said they would use less bank debt, 44% would rely more on equity finance, and 26% said they would make more use of bond finance. Some 55% said they will now only tolerate a lower level of risk from gearing.
The CBI said companies will reorganize their approach to working with partners. Asked about supply-chain fragility during the economic recovery, only 24% said they were not concerned. Businesses said they were most worried about a unique supplier collapsing.
As a result, 68% said they would be strengthening the level of partnerships with suppliers in the coming years. One in three said they would be increasing the number of suppliers, and one in five said they would be offering finance to key suppliers.
Lambert said that although domestic banks were doing a good job of rebuilding their balance sheets, the process could take some time. He said he was especially concerned about the availability of finance for smaller companies that couldn't issue equity, bonds, or commercial paper at a sensible price.
Firms will seek to improve accountability to attract customers, and a more flexible workforce will evolve built on the spirit of collaboration between employer and staff that has developed over the recession, the CBI said.
"There are important questions around how businesses are going to finance growth and investment in the future," Lambert said. "And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm."
Web site: www.cbi.org.uk
-By Nicholas Winning, Dow Jones Newswires, +44 207 842 9498; nick.winning@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=b7jQAtaN3W7unU7%2FtxHPgQ%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 22, 2009 19:16 ET (00:16 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
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