UK private companies’ have shown stronger earnings and revenues, suggesting the initial shock of the Brexit vote has subsided, according to research of European unlisted firms.
Revenue growth rates by country show the UK at the top of the table with 7%, followed by France and Germany, both with 5%, and then the Nordics and Benelux with 4%.
The ‘European private company trends’ report by asset manager ICG showed that earnings growth slowed sharply for UK unlisted companies in 2016, reflecting weak consumer and business sentiment following the Brexit vote.
The firms also suffered a “margin squeeze” caused by the sharp rise in import costs as the pound fell, but in the final quarter of 2017 earnings rebounded.
“It is interesting to note … that since mid-2017 conditions have improved, likely reflecting stabilised sentiment and the rebound of the pound,” the report said.
Nick Brooks, head of economic and investment research at ICG, said: “The UK appears to be seeing an earnings resurgence as the initial shock of the Brexit vote has waned and import costs have stabilised with the rebound of the pound. Perceived progress on Brexit negotiations will be critical in determining whether this positive shift in trend can be sustained.”
However, overall France was “outpacing the rest of Europe” when growth is measured on an EBITDA basis, as government policies were boosting sentiment and private companies were taking on more leverage in the expectation of continued expansion in 2018.
ICG calculated a 6.7% growth for European unlisted firms in aggregate on an EBITDA basis with France on top with 10%.
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