Confidence among UK dealmakers is surging, according to the latest findings from CIL’s Investment 360 Index. Almost half (48 per cent) of respondents are now positive about the UK’s short-term economic outlook, a dramatic improvement from just 19 per cent in 2024. In contrast, only 15 per cent of respondents hold a negative view this year, with 34 per cent remaining neutral.
The Investment 360 Index is based on research with 138 UK market stakeholders, including private equity investors, management teams, corporate finance providers and business advisers, and has been run by CIL, the independent international management consultancy, since 2017. The survey, now in its eighth year, provides a comprehensive view of investor sentiment and market conditions.
This year’s findings present a very different picture to 2023 when nearly half of respondents (48 per cent) were negative about the short-term economic outlook. Long term sentiment is also optimistic, with 59 per cent of respondents expressing positive sentiment in the UK’s economic climate over the next five to ten years.
M&A activity is showing signs of recovery. The Index suggests that, having hit its lowest point last year, there has been an improvement, with 28 per cent citing high or average current deal activity, compared to just 15 per cent last year. The outlook is even brighter for the next 12 months, with 76 per cent expecting an increase in M&A activity and 18 per cent anticipating stable levels. This points to cautious optimism in the business and investment communities.
Asset quality also continues to improve slowly, with 24 per cent of respondents describing the current quality of assets as excellent, good or average compared to 19 per cent last year. However, the research points to more significant improvement over the next 12 months, with 55 per cent expecting an increase in quality, compared to 48 per cent last year and just 20 per cent in 2022.
Commenting on the findings of the Investment 360 Index, Alex Marshall, Senior Partner at CIL, says: “The Investment 360 Index has recorded its highest level of positive sentiment toward the UK’s short-term economic outlook since the post-COVID M&A surge in 2021. Key drivers behind this optimism include easing interest rates and the stability expected from a new Labour Government. However, we can expect to feel some pain before the recovery as higher taxes risk choking consumer and business confidence.
“We are also seeing signs of improvement in M&A activity and asset quality, so we can be cautiously optimistic. While we won’t see an immediate acceleration in the deal environment, the improvements are encouraging, and we expect a gradual upward trajectory.”
