10th Annual Global CEO Survey

January 2007

Business confidence among UK chief executives is at a record high with more than half of CEOs saying they are more confident about growth in 2007 than they were a year ago, according to the 10th Annual PricewaterhouseCoopers’ Global CEO Survey.

More than 90% of over 1,000 CEOs surveyed from 50 countries were upbeat about revenue growth over the next three years. But despite this confidence, some respondents highlight the burden of regulation as a possible threat to growth, as well as the fear that global warming will have an adverse impact on their business.

The overwhelming boost in corporate confidence is largely driven by a strong appetite for M&A activity, as the search continues for new markets to provide expansion. Nearly Fifty per cent of the CEOs surveyed say they have completed, or are planning, a cross-border merger or acquisition over the next 12-month period. In the UK this rises to nearly 60%.

The results of the survey also indicate that cross-border M&A is becoming easier to fund. In the UK, despite the increasing availability of private equity and venture capital finance, 93% of CEOs say that internally-generated cash flow will be the likely source of funding for expansion.

As the drive towards globalisation accelerates, the majority of CEOs predict that the phenomenon will have adverse short-term effects on society, but will be offset by benefits in the longer term. Underlining these global aspirations is the desire to stay close to home. The majority of CEOs intend to focus acquisitions on companies based in neighbouring countries and regions. UK companies are predominantly seeking targets in Western Europe as well as Central and Eastern Europe.

Despite this overwhelming optimism, CEOs foresee a range of potential barriers to growth. In spite of the high public profile of issues such as terrorism, climate change, and pandemics including bird flu, few UK CEOs consider these risks to be high on their corporate agendas. Instead, they identify their five key risks as:

• Over regulation (77%),
  
• Lack of key skills (76%)
  
• A downturn in major economies (63%)
  
• Low-cost competition (54%)
  
• Technological disruptions (52%)

When CEOs were asked what they would like to be remembered for, nearly a quarter of respondents globally hoped their legacy would focus on their commitment to developing and nurturing their employees’ talents and skills. They also recognise the importance of being perceived as good corporate citizens. These aims indicate a significant shift in mindset among CEOs, away from one that focuses solely on the bottom line.

For PwC’s 10th Annual Global CEO Survey, 1084 interviews were carried out in the last quarter of 2006, with CEOs from leading companies across 50 countries. 428 were conducted in Western Europe including 56 in the UK. Over 75% of the UK CEOs surveyed were from companies with a turnover greater than $100m, of which 55% had a turnover greater than $1 bn.

To order or download the full survey please visit our Global CEO survey site.