Risk and regulatory issues rank as the least important issue to to the UK middle market sector, according to the latest quarterly survey by KPMG - and yet even that merits more thinking time from senior executives than the more fundamental issue of growth. This finding emerges at a time when confidence and optimism appear to be returning to the sector. The two previous KPMG surveys had referred to a chill wind blowing through the sector yet that storm appears to have been weathered accord-ing to the latest set of numbers. The latest survey highlights a growing concern over how much time senior management has to think about the big, heavyweight issues which affect the strategic direction of the business. In fact, 58 per cent of the survey's respondents felt that they were spending less time than was ideal thinking about the strategic direction of their business. When asked individual strategic issues, growth ranked as the second most important issue behind people and resourcing. However, when asked how much time they were actually able to spend thinking about growth strategy, 43 per cent effectively said "not enough"; easily the highest response in the four categories suggested to them. Mel Egglenton, UK head of middle market, says: "Risk and regulatory issues ranked as the least important issue to our survey respondents, yet even that merited more thinking time from senior executives than the more fundamental issue of growth. "On the one hand, that tells you something about the continued red tape burden which the Middle Market labours under. On the other hand, it tells you just how much time is spent on the 'here and now' aspects of business. "In short, more energy is expended on surviving today than thinking about tomorrow. "With confidence returning and economic conditions seem-ingly set fairer than for some time, let's hope that senior management is able to redress that balance before this mood of opportunity passes us by." When asked about the prospects for small and medium sized businesses in the coming twelve months, the number of businesses replying "good" or "very good" was up to 50 per cent - a marked improvement from the 26 per cent of the previous two quarters. Optimism for their own business was even more bullish, with 68 per cent feeling confident about their prospects - equalling the highest return ever registered in the two years the KPMG survey has been running. Mr Egglenton says: "After two quarters of doom and gloom, it's a relief to be reporting on some upbeat numbers. "OK, so overall sector confidence hasn't quite returned to the levels we saw in late 2004 - when we saw numbers in the 60s and 70s - but any improvement is to be welcomed. "When you see an upswing like this, it is tempting to look for the one single factor which might explain it all. Six months ago, 62 per cent of businesses were calling for an interest rate cut. They never got it. "That number fell to 35 per cent last time round and further still to 28 per cent this time. "Throughout this time, interest rates remained static, suggesting that businesses simply knuckled down and got on with it. "Not getting the rate cut they craved did not deter businesses as a whole from simply trading their way through what was a difficult time." The data in the KPMG survey could be interpreted as hinting at the start of a prolonged period of optimism. Every quarter, businesses are asked where they feel the UK is in its economic cycle. The ideal answer from a sector point of view is that it is either at the bottom - and therefore can only improve - or is on an upward swing. This quarter, those two answers attracted 47 per cent of respondents - a massive 20 per cent jump from three months ago. Mr Egglenton says: "Let us not forget that the people who answer this question are businessmen, not economists. "Therefore, the rationale for their answer is based not on some detailed analysis of macro-economic trends but the health of their order book. "The UK middle market sector is stocked with plenty of hardy, robustly-run businesses which have survived the trials and tribulations of the past five years. "To see them in confident mood and with healthy order books surely bodes well for the future." ..SUPL: | 
