M&A Hopes in the UK Set at Record High

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Companies in the United Kingdom have shrugged off concerns of rising protectionism and are feeling more optimistic regarding global growth, driving deal expectations to a record high.

In research that was published by EY on the day that Asda and Sainsbury’s coincidentally are scheduled to detail their deal that is estimated to be worth more than £10bn, the accountancy firm discovered that the number of businesses in the United Kingdom that are looking to pursue mergers or acquisitions of other companies (M&A) are at levels that are not observed in 18 years of surveys.

The finding rose after the announced M&A deals rocketed to an 11-year high at the beginning of this year, totalling to $120bn (£87bn) duiring the first quarter in the United Kingdom.

Business leaders have displayed bullish attitudes towards global growth, with 86 percent of those surveyed saying that they expect that the economic outlook will improve. This is approximately 13 percent above the average worldwide.

However, feelings regarding the domestic economy are less positive. Only 68 percent of the business executives in the United Kingdom think the Britain is set for an improvement in its growth.

M&A activity is also being boosted by a desire for firms in the United Kingdom to Brexit-proof the operations of their business by striking deals with firms that are based in the European Union.  The Netherlands and Ireland have replaced India and the US as part of the top five destinations for the purchases of UK companies.

Inflation outstripped volatility in the market as a risk to plans for investment, with 57 percent of firms in the United Kingdom citing it as a threat, as compared to the 31 percent who flagged market volatility.

Only 7 percent c were concerned of increases in interest rates. However, the United Kingdom has lost some appeal as a ­destination for buyers. The nation fell from third to fifth, trailing behind the United States, Brazil, Canada, and China, as the top four countries respectively for purchasing companies.