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New survey reveals confidence in long-term economic outlook despite economic slowdown

Although sentiment about the economic outlook for the UK in the short term (next 18-24 months) is negative (54 per cent), reflecting Brexit uncertainty and slowing growth, there is a much more positive view (48 per cent) when it comes to the outlook for the next five to ten years.

That’s according to a new ‘State of the Nation’ survey of mid-market management teams, private equity investors, debt providers and advisors in the UK, by management consultancy CIL.
Over half of respondents (51 per cent) also felt positive about the investment environment for their business or portfolio, with a further 36 per cent feeling neutral.  In terms of M&A activity, almost three quarters (73 per cent) of those polled said that it is a seller’s market, compared to just 9 per cent saying it is a buyer’s market.
Key factors such as Brexit and the uncertainty it brings (31 per cent), and people and labour force issues (25 per cent) were cited as obstacles to growth.  The latter presents a particular challenge for sectors such as healthcare where resources are already very tight.
Two thirds of respondents (62 per cent) think credit markets are too loose versus just 9 per cent saying too tight. It is therefore little surprise that more respondents think monetary policy should tighten than loosen (31 per cent vs 3 per cent), albeit two thirds (66 per cent) feel that monetary policy should remain the same. Despite thinking credit is too easy, businesses still don’t find it easy to vote for more expensive money! When asked whether the Bank of England is doing a good job, half of respondents think that it is, particularly in terms of helping to ensure the economy has performed well post the EU referendum and delivering on the mandate to control inflation and enable growth.  A further 45 per cent were neutral in this regard.  The Government’s performance did not get so kind a rating.
Half of respondents said that fiscal policy should remain the same and a further 33 per cent said that it should loosen.  Almost one third (29 per cent) want a policy initiative such as a tax break to help their business, 18 per cent would like no Brexit or a soft Brexit and 13 per cent would like increased support and spending.
Giles Johnson, partner at CIL, says: “Despite the unprecedented economic and political uncertainty, our research demonstrates the resilience of UK businesses and investors, particularly those in the private equity community.    Monetary policy remains supportive, investors have money to spend and life goes on. There is concern over the short-term outlook but longer term our clients back themselves and the UK generally.”

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