UK plc to overlook Europe

According to EY's latest UK Capital confidence barometer, of the UK plc companies surveyed, 25% are looking to invest in BRIC countries, up from 10% last year, and those seeking acquisitions in the US has risen from 8% to 17%. Meanwhile, companies looking to invest in Europe have fallen from 33% to 14%, highlighting listed companies' desire to capture overseas growth and overlook European firms due to a lack of growth.

On a more positive note, just less than 80% of UK executives surveyed expect deal volumes to improve over the next 12 months, with 37% of respondents pursuing acquisitions during this period. The improved mood reflects increased access to credit.

Overall economic confidence has risen sharply since last year, with 78% of those surveyed expecting the global economy to improve, compared with just 18% last year. Only 3% feel the economy will decline, down from 34% last year.

However, despite the surge in confidence, according to Jon Hughes, EY's transaction advisory services leader in the UK and Ireland, UK companies will only be targeting low risk deals, with a focus on core products and existing markets. He also notes that deals are likely to be smaller and designed to increase market share.

Indeed, of the UK executives that will be seeking acquisition opportunities, 35% said they will be looking at deals less than $50m, while those intending to do deals over $1bn has dropped from 9% to 4% and in the $50-500m range, respondents fell from 70% to 55%.

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