British Businesses are 'Europe's Most Bullish'

British companies are the most bullish in Europe about their prospects for future growth, with 83% of chief executives claiming that the outlook for their business in 2010 is either good or very good, according to new research from KPMG International.

- 83% of UK businesses believe their prospects for 2010 to be good

- Three quarters feel they are as strong, if not stronger, than they were 12 months ago

The survey, which was conducted by Opinion Way amongst 3,200 mid market businesses in eight countries, found that approximately three quarters (74%) of European businesses believe their prospects for 2010 to be positive. At 83%, UK firms were overwhelmingly the most optimistic, while in contrast, German (65%) and Danish firms (66%) were the most measured in their assessment of the outlook for the next 12 months.

The research also indicates that the majority of UK firms appear to have weathered the economic crisis well, with three quarters saying that their company was as strong - if not stronger - at the end of 2009 as it was at the end of 2008. Only 25% indicated that their business was weaker as a result of the recession. This compares to a European average of 69 percent who fell their company has survived the recession intact.

Other topline figures show:

- The majority (46%) of mid market businesses in the UK think that economic recovery will take place by the end of 2010, while a further 39% believe the upturn will come in 2011.

- Just under two thirds (65%) expect to maintain workforce levels during 2010, with a further 22% planning to recruit new members of staff.

- Only 13% intend to actively reduce their headcount.

- Financial risk was cited as the greatest threat to UK business in 2010 (59%), with access to capital (31%) and currency risks (28%) also featuring high on the list of challenges.

- Just under two thirds of respondents in the UK (63%), believe government intervention was effective in minimising the impact of the recession.

Mark Hopton, Head of EMA Middle Market for KPMG, commented: "At first sight, the fact that almost three quarters of respondents to our survey in the UK say that business over the last 12 months has been either good or very good appears to be somewhat staggering, given the prevailing economic circumstances. Some may put this down to bravado; however, I'm more inclined to think that it's a reflection of the sheer relief felt by companies who have successfully navigated their way through the downturn."

He continued: "In times such as these, survival equals success, so it's small wonder that so many feel at the start of 2010 that they have reason to be cheerful. This in turn is reflected in their cautiously optimistic outlook for the coming twelve months - many are now looking towards growth plans, including more than half who plan to develop new products and services, and over a third who are looking to tap into foreign markets."

Somewhat unsurprisingly, British businesses reported that the main challenges they have faced in the wake of the global recession were increased costs (43%) and difficulty in accessing finance (28%). However, over a fifth of UK businesses also pointed to pressure on company pension schemes as a significant issue - something which appears to be further down the list of priorities elsewhere in Europe.
More than two thirds (68%) of companies indicated that international business was a critical part of their strategy, both in terms of attempting to minimise the effects of the economic downturn and building a strong platform for future growth.

Mark Hopton said: "With so many businesses across the UK and Europe experiencing the loss of key customers and suppliers over the last twelve months, it comes as no surprise to see so many turn their attentions to the international markets for new sources of revenue. Whether it be a ramping up of their import and export business, or expansion into new territories, it's encouraging to see that cross-border activity is viewed as an integral part of company strategy. Taking advantage of such opportunities for growth will ultimately be an important catalyst in sustaining business confidence levels across the British and European economy as a whole."

Responses across industry sectors
Looking at a breakdown of responses by industry sector, it appears that executives in the transport and industrials (metals, aerospace and defence) sectors are most bullish about the timing of economic recovery, with 50% and 49% respectively believing that an upturn will be seen during 2010. However, their counterparts in the chemicals industry are much more pessimistic, with 20% believing that recovery won't arrive until at least 2012.