More News£4.65bn ‘On Hold’ as Business Projects Are Cancelled or Postponed

£4.65bn 'On Hold' as Business Projects Are Cancelled or Postponed

Research from Investec Bank reveals that 26% of businesses with an annual turnover of £1m or more are holding £4.65bn in cash as a result of cancelling or postponing business development plans during these uncertain economic times.

The average amount of money on hold as a result of this is £86,020 per firm. Investec Bank warns that much of this money will be receiving low returns as its research reveals that the average return on balances of £50,000 in business deposit accounts is only around 0.67% gross annual equivalent rate (AER), which on the average amount on hold of £86,020 would deliver gross annual interest of just £576. However, if the money was deposited in a market leading account, they could receive annual gross interest of over £1,9005.

Small businesses have around £56.756bn in deposits with banks, and if they are receiving the average interest rate in the market, the annual return they would receive would be around £380m. Back in July 2006 when Investec estimates that the average interest rate on business deposit accounts was 2.96%8 gross AER, the corresponding figure would have been £1.68bn.

Linda McBain of Investec Bank said: “With the Bank of England base rate at 0.5%, many business deposit accounts are paying low returns, in many cases much less than 0.5%. Indeed, our research shows that 32.4% of business deposit accounts are paying 0.1% or less on balances of £50,000. However, with many different business deposit accounts to choose from, you don’t have to accept this and you may be able to secure a return on your money that is higher than 2% gross AER, for example.”

Related Articles

Infosys Finacle to power Santander UK’s international cash management system

More News Infosys Finacle to power Santander UK’s international cash management system

3w The Global Treasurer
Preparing for GDPR? Here’s four things to consider

More News Preparing for GDPR? Here’s four things to consider

4m Elliott Wiseman
Cash flow in focus for investors

Cash Management Cash flow in focus for investors

5m Conor Deegan
Treasury TV: Karen Pugsley, Domino's Pizza Group

More News Treasury TV: Karen Pugsley, Domino's Pizza Group

5m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

5m Victoria Beckett
Treasury TV: Tim de Knegt, The Port of Rotterdam

10 Minutes With The Treasury Treasury TV: Tim de Knegt, The Port of Rotterdam

5m Victoria Beckett
Banks are selling clients short with short dated cash deposit U-turns

Banking Banks are selling clients short with short dated cash deposit U-turns

5m Victoria Beckett
What does sterling’s Brexit boost mean for UK manufacturers?

More News What does sterling’s Brexit boost mean for UK manufacturers?

6m Tasja Botha