Eurozone crisis weighs on UK corporate growth
Corporates say the European Financial Stability Facility is unlikely to solve investor nervousness in Europe's sovereign debt markets.As the French and German-government continue to wrangle over expanding the European Financial Stability Facility (EFSF) continues, UK corporates warned of the threat to their businesses from the ongoing eurozone crisis.
According to newspaper reports, the French want to turn the EFSF into a "bank" able to issue EUR 2 trillion in loans, however, the Germans are resistant to this. An overwhelming majority (83%) UK corporates are also unconvinced that the EFSF will create confidence in eurozone sovereign debt markets, according to a survey conducted by Investec Corporate and Institutional Treasury. More than 90% of UK corporates expressed concern about potential risks to their business stemming from the eurozone crisis.
More than 50% predicted that the euro will fall below sterling in the next 12 months, yet only 24% said they had put in place a hedging strategy to protect them from currency volatility. Another 23% expect to use more FX options over the coming months.
Yet, despite the threats from the eurozone, 60% of UK corporates expect their business to grow in the coming months with almost 50% predicting organic rather than acquisitive growth.
Interestingly, when corporates were asked how the Government could help them, more than half highlighted easing immigration rules as key to business growth. Only 14% said additional incentives should be given to banks to lend more capital.
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Date Posted:21st October 2011