According to its corporate health check study, the motor trade was just one of seven industry sectors to experience rising profits – from 6.79 per cent to 9.73 per cent.
But the average return on capital among leading British companies across the industrial economy fell from 6.35 per cent in the 12 months to December 2002 to 5.76 per cent in the twelve months to March 2003.
“UK corporate profitability has now fallen for 16 consecutive quarters,” says Peter Brooker, author of the Experian report. “This is a longer period of sustained decline than in either of the last two recessions. UK corporate profitability is now barely one-third the level it achieved in early 1999.
“The decline also appears still to be gaining momentum; the year-on-year fall up to the first quarter of this year was the steepest during the four years since profitability peaked in 1999.”
Part of the reason for lower profitability and lower business confidence lies in higher business costs, including, since April, the rise in employers' National Insurance Contributions. Capital investment is also a factor, with many companies freezing recruitment and investment because of falling profits.