Research round-up - business confidence improves

14 July 2003

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After three consecutive years of stockmarket declines, the Gresham Monitor of middle market companies and the latest quarterly Confidence and Attitudes Survey from the BVCA have both found that UK business confidence is slowly returning, while a Cinven report has found increasing optimism among senior European bankers. The Gresham Monitor is a survey of the directors of middle market companies in a range of sectors. On the positive side, 56% are optimistic about the growth prospects for the next 12 months, up from 43%, and 53% expected to make some transaction, whether raising finance or buying or selling business. While there was little change in sales, however, an increasing proportion of respondents reported falling profitability, up to 36% from 24% in July 2002. A BVCA attitude survey has found that only 3% of the private equity industry predict a decline in the business climate over the next three months. 37% expect an improvement, compared to just 14% in the previous quarter. Some cautious optimism was noticeable, with 46% of respondents expecting an improvement in portfolio performance, and 45% expecting an improvement in investment activity. However, 76% considered the current climate unfavourable for fundraising. Opinion on the euro is divided, with 45% in favour and 40% against joining the eurozone. According to a Cinven report, across Europe 64% of senior bankers expect to see an increase in private equity participation within the European M&A Market. Rising business optimism was also indicated, with 49% expecting company profits to rise, compared to 21% six months ago, and 33% expecting an overall rise in the economic climate.