By Marcus Leach
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.
This is according to a survey of senior executives at a client briefing hosted by Investec Corporate & Institutional Treasury.
Despite the fact that a staggering 93% of executives surveyed are concerned (37% were ‘very concerned’) about the potential risks posed to their businesses by the Eurozone crisis, three fifths (60%) expect their firms to grow over the next 12 months. Nearly half (47%) predict organic growth while around one in 10 (13%) are planning to grow through acquisition.
When asked to identify how the 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 ten (38%) executives intend to grow their business over the next year by expanding into new markets. Furthermore, a quarter (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 1 in 4 (23%) planning to use FX option products more over the next 12 months.
“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," Phil Shaw, Chief Economist for Investec in London said.
James Arnold, Investec Corporate & Institutional Treasury said with the uncertainty it is vital their clients protect their businesses.
“With so much uncertainty lingering around the Eurozone, our clients know it is essential to protect their business from unexpected and adverse currency fluctuations," he said.
"This is all the more pressing considering that a majority of clients have exposure to the Eurozone area. At Investec, we feel that it’s paramount to keep our clients informed of the risks that lie ahead. We always give them our own market views, but also feel it’s important to give them direct access to some of the best economic minds in the business. This provides them with the necessary insight and intelligence to effectively plan for the year ahead; a year that will clearly be hard for many.”
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