UK businesses are missing out on a potential £124 billion in returns over the next five years by leaving £155 billion dormant in accounts earning no interest, according to new research from InvestEngine. The study reveals that businesses, including SMEs, hold £560 billion in bank accounts, but a significant portion of this cash—around 28%—is sitting idle without generating any returns.
For SMEs alone, £223 billion was held in deposits during the first quarter of 2024, with approximately £62 billion of that earning no interest. With rising costs and financial pressures, businesses could significantly benefit by transferring these surplus funds to investment accounts, potentially generating £124 billion in returns over five years.
InvestEngine’s platform allows businesses to move their surplus cash into diversified, low-risk investment options, such as ETFs, offering higher returns compared to traditional savings accounts. For businesses needing quicker access to funds, Money Market ETFs present a low-risk, inflation-beating option by matching the Bank of England’s overnight interest rates, currently at 5.20%.
Despite these advantages, only 8% of SMEs currently use an additional account outside their main bank, leaving most missing out on investment opportunities. At a time when insolvency rates are rising, these funds could offer a financial lifeline for many struggling businesses.
Andrew Prosser, Head of Investments at InvestEngine, commented: “With rising costs biting into business profits, our research shows how much more businesses could earn by investing idle cash. By using accounts that earn interest or investment returns, businesses could see a collective boost of £124 billion in just five years.”
Online tools, like InvestEngine’s investing calculator, help businesses estimate their potential gains. For example, investing £100k over 10 years with monthly top-ups could see the portfolio grow to £252,011, generating £140,011 in returns.
InvestEngine offers business investment accounts with no fees on DIY portfolios and low costs for managed accounts, enabling companies to make their cash work harder in today’s challenging economic climate.
