Finance leaders across Europe expect the majority of costs to return as growth and recovery is back on the agenda, research has revealed.
Cost Boomerang by
KPMG Performance and Technology has shown firms are concerned that cost reduction and streamlining delivered during the recession could bleed back into businesses as managers focus on the growing top line. There is an urgent need to stay lean post-downturn despite a desire for growth, the report warned.
UK businesses anticipated the lowest proportion of sustainable cost savings: just 5 per cent. This equates to £90 billion of extra and returning costs. The Netherlands was hopeful of sustaining nearly 10 per cent, Spain 8.1 per cent, Switzerland 6.6 per cent and Germany 6.5 per cent.
Returning costs are driven by two distinct factors, the report said: short-term cost cutting during the recession and a lack of cost control as businesses spy the early signs of recovery.
Martin Scott, partner, KPMG Performance and Technology said: “There is a real risk that mounting costs will quickly erode already tight profit margins and eliminate bottom line growth. Organisations need to redouble their cost-management efforts to make sure that their recession-driven cost improvements are not lost.”
The cost of finance is the most significant source of cost increase for UK businesses, according to 80 per cent of respondents.
