Britain’s top firms failing to take advantage of economic opportunities

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A recent report has suggested that the country’s biggest companies are not exploiting the economic recovery as much as they should be. According to the report, to the end of the first half of the year, revenue has increased only marginally above inflation at 2.2%.

Particularly sluggish, according to the Share Centre’s Profit Watch Report, have been the mobile telecoms sector and the food and drug retail segment. Operating profits here fell by 6.6%, with revenues increasing by 0.2%.

Big for small

Such lethargy from larger firms could offer incentives to smaller firms working in the sectors to grow, however.

With many of the most exciting and innovative small firms in the sector increasingly turning to the services of an outsourcing accounting practice, new opportunities are being found. This is giving greater control to the small business leaders, empowering them to have confidence in growing the business.

The country’s middle-capitilisation (or midcap) firms also had a better overall performance than the larger firms. Midcaps have reported a profit increase of over 5%. Meanwhile, the FTSE-100 listed firms have fallen way short.

At the head of the list for poor performance were many of the very biggest firms, such as Tesco, which reported no sales growth.

However, indicative of the great environment for younger firms, newcomers to the FTSE-350, which include the likes of Carphone Warehouse, JD Sports and Pets at Home, were the leading lights in terms of growth.

The authors of the report, which was an analysis of raw data from the UK’s 350 powerhouses, said:

“UK Plc revenues have crept just ahead of inflation, which is a weaker performance than we expected, given that the UK economy enjoyed a rapid recovery during the period.”

Blaming the pound

Falling export figures from Britain have been blamed on the strength of the pound, with the Office for National Statistics confirming last week that growth in the market was “sluggish”.

With robust accounting though, small firms could also see a niche in overseas markets as a result.

Overall, however, the trade deficit has got bigger in the last month. This is largely the result of stuttering and stumbling EU marketplace, which continued to hold back the recoveries of many ‘survivor’ countries, such as the UK and Ireland.

Tensions with Russia will continue to have an impact though and, with the crisis likely to go on for years rather than months, markets and firms are not panicking greatly at the moment.