Sentiment among corporate investors in the eurozone is at the highest level in three years despite trade tensions and political uncertainty, according to a survey by UBS.
Almost half of the of 600 firms polled during the third quarter said they planned to increase investment, while just 14 per cent said they were planning cuts. The net balance of 36 per cent — up from 29 per cent in the second quarter — is the highest recorded by the survey since it began in 2015.
The survey also showed a pick-up in firms’ recruitment plans, adding further evidence that eurozone economies are withstanding trade worries.
“At a time when the resilience of the eurozone has been questioned, these results are encouraging,” Reinhard Cluse, an economist at UBS said.
“Hiring intentions are strong . . . and a growing number of firms expect to pay higher wages, which suggests that the recovery in labour markets, real wage growth and core inflation is on track”.
That should give the European Central Bank confidence as it moves to end its massive bond-buying programme, he added.
Investment in the eurozone has been recovering following a cutback between 2008 and 2014.
Eurozone fixed investment grew by 2.8 per cent year-on-year in the second quarter, according to analysis by UBS. That was up from a trough at the height of the crisis in 2009 when it shrank by more than 12 per cent.
While investment growth decelerated between the first and second quarter of this year, Mr Cluse said he was “relieved to see that corporate investment activity has held up reasonably well at a time when concerns were growing over global protectionism and political risks” such as Italy and Brexit.
But while access to funding improved in almost all eurozone economies during the third quarter, in Italy the situation has deteriorated since May, the survey showed.
Along with a decline in perceptions of the bloc’s health in the eurozone’s third-largest economy, “these datapoints may be early signs of the current political issues in Italy impacting corporates,” Mr Cluse said.