INVESTING overseas could be the best way for companies to beat a toughening economic climate.

According to a new Coopers & Lybrand survey among the South East's middle market companies there will be a slowdown in the UK economy within the next year which could expose stay at home companies to a new recession. Only 11 per cent of businesses nationally expect demand to increase during the next 12 months, a fall from 66 per cent in the last survey. Smaller companies in particular seem content to service domestic markets while the UK economy is strong. Partner Jon Wright, of the firm's private clients middle market team, said: "The very strength of the pound makes it the right time for UK companies to be considering overseas investment while UK markets are creating cash." Rosemary Radcliffe, Coopers & Lybrand's head of economics, said: "The UK economy has slowed significantly in recent months due to a sharp deterioration in the trade balance. There could be a hard landing with growth coming to a virtual standstill in 1999."

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