UK deals still 60pc down on pre-crisis highs

Tim Wallace
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THE FINANCIAL sector across the world has still not recovered from the credit crunch, with deal levels a quarter below 2007 levels, law firm Allen and Overy said yesterday.

And in the UK the picture is even worse, with deals – from mergers and acquisitions, and bond and equity fundraising – down 63 per cent. Just $634.7bn (£401bn) of deals were done in the UK in the 12 months to August, taking it to sixth place in the world, behind Germany, Canada, Japan, China and the US.

The poor performance contrasts with China, where volumes more than doubled to $8.14bn. Globally, deal values have stagnated at around the $15 trillion mark since the crisis, from $20 trillion before.

The only type of activity which has seen substantial growth worldwide is project finance. From 2006-07 to 2012-13, the sector has grown by more than 50 per cent to roughly $360bn. “Connecting remote resources to high value markets remains a key driver for some of the largest project finance transactions,” said the report. “This can be seen not just in the vast projects in cross-border pipelines but also in transportation projects which underpin the route to market for the product of new mining projects.”

“Five years on from the start of the global financial crisis, the only certainty is that it remains impossible to predict accurately what the future will bring and whether markets around the world are finally beginning to normalise,” said the report.