In a sobering development for the UK business landscape, the national Net Rate of Return on Capital Employed (ROCE) has dropped to just 8.9% in 2024—one of the lowest levels seen in three decades.
This is more than a concerning statistic. It’s a red flag for every UK business owner and financial decision-maker. At its core, this rate reflects how effectively companies across the country are using their capital to generate profits. A low ROCE means that investment capital is not working efficiently—and that has far-reaching implications for business growth, competitiveness, and long-term resilience.
What Is ROCE and Why Should You Care?
The Net Rate of Return on Capital Employed is considered one of the most reliable indicators of true profitability. Unlike simple profit margins, ROCE takes into account the assets used to generate those profits, offering a more complete picture of how well a business is converting investment into returns.
Historically, UK businesses enjoyed ROCE levels of over 13% in the late 1990s. But as the infographic above shows, profitability has been in steady decline since then—impacted by the 2008 financial crisis, global market pressures, and more recently, post-pandemic economic volatility.
Now, at 8.9%, we are witnessing capital underperformance at a national scale.
What This Means for You
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Diminished Investor Confidence: Investors and lenders are paying closer attention to how effectively businesses can deploy capital. Lower ROCE can make it harder to secure funding or justify expansion.
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Strategic Reassessment Needed: Businesses can no longer afford to rely on outdated performance metrics. It’s time to assess how well your capital is being used—and take steps to improve efficiency.
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Profitability at Risk: If your company’s ROCE is below or even at the national average, your ability to grow and compete is already being compromised.
Are You Measuring and Optimising Your ROCE?
Most companies track sales and margins—but few actively manage ROCE. Yet this metric is critical in today’s capital-constrained environment. Improving ROCE isn’t just about cutting costs; it’s about making smarter decisions about investments, operations, and asset management.
Need Help Improving Profitability?
We’re here to help UK business owners decode data, optimise performance, and turn metrics like ROCE into actionable strategies. Follow us on LinkedIn for tips, insights, and analysis that keep your business one step ahead.
Let’s make capital work smarter—starting today.