Middle market enterprises' preferences for future funding are shifting from debt to equity, according to a survey by Gresham Trust, the UK private equity house.

The shift comes amid general despondency over the UK economy and concerns over interest rates which are leading middle market firms to seek alternatives to bank borrowing. The survey found a greater acceptance of private equity as a normal source of funding for firms, with the percentage funded by private equity or venture capital increasing to 25% from 20% in December 2000.