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UK firms 'optimistic about economy'

Published on: 25 Feb 2014

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Corporate finance could be set to pick up over the coming months, with the annual Ipsos Mori poll – which has been running since 1981 – recording strong levels of positive sentiment among business leaders despite continued concerns about household budgets and the sustainability of the UK’s economic recovery.

The organisation found that 93 per cent of the 105 chairman, chief executives and senior directors it questioned are anticipating an economic improvement over the next 12 months – although more than half said a year or more will pass before it begins to expand in any significant way.

Output is now only two per cent below its pre-crisis peak, according to the Office for National Statistics

However, productivity remains stubbornly low, even though the current conditions are those in which it would be expected to rise, leading to concerns over the sustainability of the much-vaunted boost in the economy.

Many of the business chiefs interviewed by Ipsos Mori pointed to this as their biggest concern, explaining that they are unsure as to what needs to be done to get this metric back on track in line with the other figures.

However, 83 per cent of respondents endorsed the policies of the coalition government and suggested that its approach is likely to lead to long-term economic recovery.

Among further steps the government could take, infrastructure investment was the most popular, followed by the evergreen desire to cut red tape for businesses across a number of different industries.

Steve Varley, managing partner at consulting firm EY, said he felt more optimistic about business prospects across the UK than he has done for five years.

“There’s an opportunity now, with the capital markets opening up, for companies to raise debt equity and we see transactions coming back on quite a large scale,” the expert added.

However, he pointed to the risk of political changes as one of the biggest potential problems in the future, with Ed Miliband’s labour performing strongly in the polls.