Entrepreneurs Call For Further Interest Rate Cuts - Seven in Ten Want Rate Of 5% Or Below

Britain's entrepreneurs want further cuts in interest rates if they are to increase investment, according to a MORI survey released by business advisers Ernst & Young.

The Survey, of more than 850 entrepreneurs, shows 69% wanting interest rates to fall to 5% or less. Further cuts would fuel investment, with the bosses of Britain's growing businesses saying they would increase investment in capital spending (57%), sales forecasts (48%), marketing (30%) and recruitment (23%).

Asked how their 1999 business plans differed from 1998, the respondents said they intended to increase spending on marketing and sales forecasting, 54% and 42% respectively. But little change is expected in research and development (66%), training (54%) or recruitment (45%).

David Wilkinson, Ernst & Young National Head of Entrepreneurial Services, said: "Entrepreneurs are clearly very focused on increasing investment in their businesses, with a knock-on effect on the economy and employment. While today's interest rate cut by the Bank of England is something almost all entrepreneurs will welcome, there is a clear desire for further cuts."

"A strong entrepreneurial sector is the backbone of a thriving economy and the key driver for growing companies is investment. Anything which encourages this is to be praised."

But if economic prospects worsen, job cuts will be one of the main responses from entrepreneurs, with 42% citing this as their most likely measure, along with general cost cutting (65%) and putting off capital investment (also 42%).

Wilkinson continues: "Many commentators are predicting a short, shallow recession before an upturn in the Year 2000. If this is the case, entrepreneurs will have a major role to play in the country's economic growth into the new millennium and we will see many new and exciting companies coming to the fore."

Ernst & Young launched the Entrepreneur of the Year award scheme on Tuesday, 2 February, to celebrate Britain's entrepreneurs and hold them up as an example to other business people and to society as a whole.

Technical details

The nationwide self-completion survey was carried out by MORI on behalf of Ernst & Young between 9 and 21 January 1999. Responses were received from over 843 entrepreneurs in businesses with turnovers ranging from less than 1635m to in excess of 163500m and employing from less than 20 up to 500 plus.

Based on the replies, the sample has been estimated to employ 175,220 people. Total turnover was almost 16345 billion.

MORI's Captains of Industry survey interviewed face-to-face 149 senior managers from the top 500 UK companies. The fieldwork took place between 15 September and 19 September 1998.