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The utility sector is holding its ground ahead of Brexit, recording a 9.5% boost in business investment last year, according to analysis by specialist tax consultancy Catax.
Total business investment in the electricity, gas and water industries hit £15.3bn in the first three quarters of 2018, according to the latest government data1. This compared with £14bn for the same period a year earlier.
The sector has seen year on year growth of about eight per cent since 2015 when investment stood at £16.7bn for the year, rising to £19.6bn by the end of 2017.
The sector is bucking the national trend, with latest figures showing the UK economy grew at its most sluggish rate for six years in 20182.
Overall business investment dropped from £46.9bn to £46.2bn for the fourth consecutive quarter in 2018 across all industries, the first time that has happened since the economic downturn in 20093.
It is a challenging time for businesses, who have been unable to solidify their expansion and investment plans while faced with an uncertain future relationship with the EU.
Against this backdrop, utilities companies are maintaining a relatively robust posture, recording business investment of £5bn between July and September 2018. This was an increase of £206m from the £4.8bn recorded for the same period in 2017.
With the rise of renewables and digital technology, the utilities sector has continued to innovate with 83 per cent of utilities and manufacturing companies developing new products and services in the last two years, spending an average of £190,911 on this, according to the Catax research⁴.
Mark Tighe, CEO of Catax, comments:
“It’s almost business as usual for utilities companies, with the loss of confidence seen in other industries notable by its absence. While most sectors are bunkering down before the UK reaches for the ejector seat, utilities companies are forging ahead and continuing to invest in new technologies. Refusing to put off investment decisions will leave these firms in better shape to weather whatever storm might be coming. The utilities sector has historically been a beneficiary of more predictable revenue streams and this could be playing a part but even that has changed of late, with greater government and regulatory focus than ever, including moves to cap prices. What seems a more likely driver is that the sector is undergoing a rapid transformation due to digital technology and ongoing growth in renewables and this is encouraging continued investment and innovation. Our own research has shown that more than four in five utilities and manufacturing firms have developed new products and services in the last two years, suggesting these companies are not delaying investment decisions in the way we are seeing in other sectors.”