Optimism on global recovery drives UK CEO confidence – PwC’s Global CEO Survey

PwC publishes findings of the 21st annual CEO Survey at World Economic Forum

 

The number of UK CEOs expecting the global economy to improve over the coming year has more than doubled, according to PwC’s 21st annual CEO Survey published at the World Economic Forum in Davos.

The survey found that 36% of UK business chiefs believe global economic growth will improve, compared to 17% in 2016, the most confident they’ve been since 2015.

Almost nine in 10 (88%) UK CEOs are optimistic about their organisation’s revenue growth prospects for the next 12 months (89% in 2017), broadly in line with global counterparts (87%). However, with that Brexit negotiations having only recently reached a significant milestone, it is unsurprising that the of UK business leaders who describe themselves as ‘very confident’ has dipped to 34% from 41% last year.

Confidence among business leaders is even higher about growth prospects over the next three years, with 96% expecting their revenue to increase - higher than the global figure of 91%. This may reflect comfort in the prospect of a two year Brexit transition period, despite uncertainty over the outcome of trade negotiations.

Despite Brexit uncertainty, global CEOs identify the UK as the fourth most important country for their businesses’ growth, behind the US, China, Germany. For UK CEOs, the US remains the top overseas market, followed by Germany, China and Australia, a reminder that CEOs see growth opportunities beyond Europe.

The annual PwC global CEO survey is undertaken by Belfast-based PwC Research, the firm’s global research centre of excellence. The 21st annual CEO Survey is published on the eve of the World Economic Forum in Davos and is the keynote report that sets the scene for the economic discussion amongst global business and political leaders.

 

Launching the report in Davos, Kevin Ellis, chairman and senior partner of PwC, said:

 

“Robust confidence levels among UK CEOs points to resilience in uncertain times, but this is tempered by a big dose of realism about the challenges ahead. Brexit uncertainty, regulation, availability of skills and cyber are key concerns but business leaders remain confident they can navigate through them.”

 

Caution ahead

While optimism remains high, the PwC CEO Survey findings suggest businesses are braced for more challenging times ahead. The UK has been a great job-creating engine in recent years with record levels of employment. However, the number of UK business leaders expecting to increase headcount has fallen slightly to 54% from 63% last year, and 15% expect to reduce headcount, compared to 10% in 2017.

UK and global CEOs share the same top two concerns about the biggest economic or policy threats to their company’s growth - geopolitical uncertainty (83% UK; 85% globally) and over-regulation (80% UK; 83% globally). This is a change to 2017 when UK business chiefs viewed uncertain economic growth and exchange rate volatility as their top two concerns.

Cyber threats and the availability of skills remain the top business concerns for UK CEOs. Rising employee and benefit costs have overtaken changing consumer behaviour, which was in last year’s Top 3 but remains a threat to 63% of UK CEOs.

 

Digital disruption and business taking responsibility for skills

UK CEOs are acutely aware of the disruption emerging technologies, such as AI, Blockchain and robotics, could cause, with 69% agreeing that emerging technology and automation will disrupt their business over the next five years.

Ensuring they can attract and develop the right talent is a top priority for 83% of UK CEOs, compared to 80% globally. In the UK, 77% say they are improving compensation and benefit packages to attract or develop people with digital skills, but 62% of UK CEOs don’t believe they currently have sufficient digital skills amongst their workforce, while 53% are concerned about the availability of skills more generally.

Upskilling existing employees is as vital as creating the next generation of tech talent. More than half of UK CEOs (58%) recognise they have a responsibility to retrain employees whose tasks and jobs may be impacted by automation. 38% of UK business leaders believe it is difficult to attract the right kind of digital talent, and are taking practical steps to address this issue. 63% are using or plan to use apprenticeships and internships to grow their workforce, while developing the skills they need for today and tomorrow.

 

Kevin Ellis continued:

 

“Disruption from emerging technology is now a fact of life and business leaders are considering how the fourth industrial revolution will impact their operations and employees. At the same time, they also have the day-to-day demands of managing costs and growing their businesses.

 

“How UK businesses respond to these short and long term opportunities and challenges will determine their own and the UK’s future success.

 

“Business and Government have the opportunity to work together to help current and future employees develop skills that keep pace with technological change.

 

“Creating the next generation of skilled workers as well as attracting and retaining tech talent will be essential in a post-Brexit world. Many CEOs are already focused on modernising working environments, introducing flexible working and implementing continuous learning and development programmes.

 

“The more that UK CEOs take the lead and innovate, the greater the likelihood that the UK will maintain its competitive position on the international stage.”

 

Ends

Notes to editors:

About the PwC CEO Survey

PwC Research, based in Belfast, conducted 1,293 interviews with CEOs in 85 countries, including 193 in the UK. The sample is weighted by national GDP to ensure that CEOs’ views are fairly represented across all major countries. The interviews were also spread across a range of industries. For further information please visit pwc.co.uk/ceosurvey

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