So far, so good

So the election resulted in the predicted hung parliament, which has led to Britain's first
coalition government since 1945. While many cabinet seats are still waiting to be announced at time of writing, the new chancellor George Osborne and business secretary Vince Cable are facing a considerable challenge to keep the momentum in the economic recovery.

After all, the principle threat to the continuing growth the UK buyout market has
experienced over the past six quarters is the precarious state of the economy both at
home and on the continent. While government spending has so far kept the economy on
life support and seen it through the initial crisis, for a sustained recovery the baton has to be handed over to the consumer.

Indeed, an increase in consumer spending will be crucial, but, given the headwind in the
shape of reduced government stimulus and an increase in taxation, many doubt British
consumers are up to the task. The knock on impact of this scenario to the trading prospects of businesses is significant and would most likely throw the market back into a state of limited deal-doing, as private equity houses are unable to project future performance of target companies. Add to this the fragile confidence in the debt markets, and even six quarters of continuous growth can look like a tenuous trend.

Of course, this is the glass-half-empty scenario and, so far, signs coming from the
private equity community have been fairly positive: good pipelines of deals, encouraging
performances of portfolio companies, increasing debt availability and several strong exits. To use the market trader's adage,"the trend is your friend" - but it certainly helps to keep an eye on the risks ahead.

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• UK / Ireland