Companies around the world are starting to share the exuberance that inspired investors last year.

Business confidence is rising, with a weekly gauge compiled by Moody’s Analytics at its highest level since the survey began in 2003.

Mergers and acquisitions are surging, with $130 billion (R1.4 trillion) in takeover offers already announced this year. And enterprises from Microsoft to Volkswagen are preparing plans to step up capital spending after companies have squirrelled away a record amount of cash to protect against a new financial crisis.

“The animal spirits are coming back,” said Mark Zandi, the chief economist at Moody’s. “This is going to be a good year” for capital expenditure and hiring.

Behind the projected upturn: increased confidence in the durability of expansion following faster US and global growth late last year, the need to replace ageing and out-of-date equipment, and a waning of what Zandi calls “existential fears”, including concerns about a euro zone break-up.

A comeback is critical for the global economy and financial markets. The MSCI World index is up 19 percent from a year ago and sales of high-yield, high-risk bonds set a record last year.

“You’d have to say that values are more stretched than they were a year ago,” Lawrence Summers, a former US treasury secretary, said earlier this month. The Davos veteran warned that major economies were threatened by “secular stagnation” that even 0 percent interest rates could not solve.

“What is fresh is we are now in less of a crisis mood,” said Ernesto Zedillo, a former president of Mexico and now a professor at Yale. “People were extremely fearful a year ago. Now we seem to be in better shape but with significant fragilities.”

The question is whether waning anxieties will stir what the late economist John Maynard Keynes called “animal spirits”, leading executives to shed their conservatism and step up investment.

At the end of 2012, large global businesses, excluding financial, sat on $4.5 trillion in cash, 73 percent more than in 2006, according to Bank of America Merrill Lynch. The stockpile was $1.4 trillion in the US, $1.1 trillion in Europe and $613bn in Japan.

So why spend now? One reason is to ride the acceleration in global growth. Today the International Monetary Fund will raise its forecast from the 3.6 percent it predicted last October, according to managing director Christine Lagarde.

The need to replace out-of-date equipment is another reason to spend now. The average age of capital stock has been pushed close to a record at more than 12 years in Europe, Credit Suisse estimates. The figure for the US is 17 years, which is the highest since 1970.

Companies might also have to start spending to take advantage of breakthroughs such as greater broadband connectivity and big data, according to Laura Tyson, a professor at the University of California at Berkeley’s Haas School of Business.

“There are technological reasons, as well as animal spirits, for why we can be optimistic there will be a pick-up,” Tyson said. – Bloomberg