UK Corporates Doubt EFSF’s Ability to Restore Confidence in Eurozone

An overwhelming majority (83%) of senior executives representing UK corporates do not believe that the European Financial Stability Facility (EFSF) will be sufficient in securing confidence in eurozone sovereign debt markets, according to a survey of senior executives at a client briefing hosted by Investec Corporate and Institutional Treasury (Investec), part of Investec Bank.

Despite the fact that a staggering 93% of executives surveyed are concerned about the potential risks posed to their businesses by the eurozone crisis (37% were ‘very concerned’), three fifths (60%) expect their firms to grow over the next 12 months. Nearly half (47%) predict organic growth, while 13% are planning to grow through acquisition.

When asked to identify how the UK government could help their business to grow, over half (52%) of respondents thought that immigration rules should be eased, while 14% thought that additional incentives should be given to banks to lend capital to businesses.

The research showed that nearly four in 10 (38%) executives intend to grow their business over the next year by expanding into new markets. Furthermore, 24% have already put in place a hedging strategy to protect themselves against further currency volatility. The overall majority of executives (53%) in attendance felt that the euro would be down on sterling over the next 12 months, but that the current high market volatility could provide excellent opportunities in FX markets with nearly one in four (23%) planning to use foreign exchange (FX) option products more over the next 12 months.

Phil Shaw, chief economist for Investec, said: “It is critical that European leaders act quickly and decisively to stabilise euro area sovereign debt markets and steer the global economy away from the threat of another recession. Even if they are successful, huge challenges remain in addressing the longer-term structural flaws in the eurozone.”


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