There are several key indicators that demonstrate a return to health for the UK economy. Growth? Tick. Purchasing managers’ indexes positive? Tick. Car production accelerating? Tick.

Last September a headline in The Times stated: ‘Carmakers put foot down as exports go into overdrive’. Car manufacturing was up 16.2% in the 12 months to August, the CBI found in its survey of 400 manufacturers, with production at the highest level since late 2008. Total orders had also risen five months in a row. Stephen Gifford, the CBI’s economics director, said: "Firms were more upbeat about growth prospects in the coming quarter than at any time since 1995."

Dip in M&A

And indeed, this has been echoed by M&A activity. EY, for example, reported in mid-summer that deal activity in the UK automotive sector saw the largest increase, with deal volumes increasing from 19 in the first half of 2012 to 30 over the same period in 2013.

"This peak in activity in the automotive sector indicates that there are still pockets of value for those businesses willing to invest in certain sectors," said Jon Hughes, head of EY’s transaction advisory services in UK and Ireland. When it comes to manufacturing in general, statistics published by Thomson Reuters suggest the volume and total value of deals has fallen in 2013. By mid- December worldwide there had been 10,827 deals worth $633bn, compared with 11,931 deals worth $687.9bn for the same period in 2012. At the halfway point of the year 2013 had been slightly up on 2012.

However the Deloitte M&A Index, a forward-looking indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for dealmaking, was more positive. Global M&A activity was forecast to increase by 6% in the second half of 2013, according to this index. It seems like the pipeline of deals has just become stuck as deals continue to take longer to complete.

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