Less than half of all finance professionals at UK companies think the forecasts they rely on are reliable, a report published by PricewaterhouseCoopers has warned.
The finding comes despite 80 per cent of them saying that the accuracy of such forecasts is “critical” to the success of the businesses that they work for.
PwC, one of the Big Four accountants, warned that UK businesses desperately need to overhaul their finance departments if they are to capitalise on the next wave of growth as the global economy recovers after years in the doldrums.
In total it reviewed nearly 200 senior finance functions at a variety of companies most of which had global reach.
Andrew McCorkell, who advises businesses on how to improve finance performance for PwC, said such a finding was common among this country’s top businesses. “The dearth of confidence is a consistent finding,” he said.
“Accuracy of forecasting is fundamental to business decision making, and finance need to be in a position to confidently support that.”
He added that a failure to act on the findings could “in the current climate... cost a company dearly in terms of innovation and growth.”
The report also found that firms in the top 25 per cent of the performers spent as much as two thirds more on finance departments than those at the bottom. But only a third of the firms have standardised employee development plans to improve and capitalise on their best staff.
A number of indicators have recently shown that the UK economy is finally improving and the IMF recently upgraded its growth forecasts for the country. The latest EY ITEM Club report, released today, showed its hopes for the British economy had improved. The forecasting group raised its prediction to a 1.4 per cent rise in GDP this year, having predicted an increase of 1.1 per cent three months ago, and also now expects a 2.4 per cent jump next year instead of 2.2 per cent.
Its optimism was partly due to the Government’s Help to Buy scheme. EY ITEM Club’s Peter Spencer, said the “efforts to revive the mortgage market have been well-timed and targeted, and will benefit most regions in England”, adding the chances of another housing market bubble were “extremely slim.”