Private equity professionals have become significantly more bearish on the UK economy over the last year, according to new research.
More than half of senior UK private equity professionals surveyed in the UK, at 57 per cent, are worried that UK economic growth will be weaker this year than in any of the other G7 nations, Lloyds Banking Group research found.
This was a dramatic dive from last year, when only 15 per cent were quite so down on the UK's prospects.
"The UKs private equity community is finely tuned to the impact of the nations economic prospects on their investments, so its telling that fears over the uncertainty caused by Brexit is topping their list of concerns as we edge closer to March 2019," said Lloyds' head of financial sponsors Stephen Quinn.
Half of the financial sponsors surveyed say they expect UK growth to stay at 2017 levels, 43 per cent expect it to worsen and only seven per cent believe growth will improve.
Meanwhile half of firms said they were worried about the effects of leaving the EU, with 38 per cent saying these fears were greater than a year ago.
Despite this, private equity seemed confident about its own sector and about the UK's future as a financial services centre.
More than a third of private equity firms expect revenue to increase this year, while 69 per cent expect domestic headcount to remain stable and 46 per cent think business investment in the UK will stay constant – despite 61 per cent forecasting a rising cost base.
A huge 82 per cent think the UK will remain Europe's most prominent financial centre even after Brexit, though 35 per cent are considering moving operations somewhere outside the UK.
“Private equity managers have, for some time, proven themselves highly adaptable in challenging external conditions and I expect them to continue to do so," said Quinn.
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