Company bosses from around the world have ranked the UK as the fourth most important country for their businesses’ growth, according to a PwC survey.
Despite Brexit uncertainty global CEOs have placed the UK behind just the US, China, and Germany in terms of growth potential.
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For UK CEOs, the US remains the top overseas market, followed by Germany and China: a reminder that CEOs see opportunity beyond Europe, according to the accountancy giant.
The global economy is projected by the International Monetary Fund to grow by 3.7 percent this year, the strongest expansion in seven years.
Meanwhile, the number of UK CEOs expecting the global economy to improve over the coming year has more than doubled, with 36 percent of UK business bosses expecting global economic growth to improve this year, compared to 17 percent in 2016.
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.
Almost nine in 10 (88 percent) UK CEOs are optimistic about their organisation’s growth prospects for the next 12 months (89 percent in 2017), broadly in line with global counterparts (87 percent).
The UK economy is estimated to have grown by around 1.6 percent to 1.7 percent over 2017 though the growth is projected to slow to 1.4 percent in 2018 by the Office for Budget Responsibility.
Confidence among business leaders is even higher about growth prospects over the next three years, with 96 percent expecting their revenue to increase — higher than the global figure of 91 percent. This may reflect comfort in the prospect of a two year Brexit transition period, despite uncertainty over the outcome of trade negotiations.
Meanwhile, the damage to the UK economy from Brexit could be “dwarfed” by the positive impact of other developments in the global economy, according to former Goldman Sachs economist Jim O’Neill.
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He told the BBC:
I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective. [But] maybe [better global growth] means the country’s going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago.
As important as Brexit is, it isn’t the most important thing facing Britain’s future.
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 percent from 63 percent last year, and 15 percent expect to reduce headcount, compared to 10 percent 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 percent UK; 85 percent globally) and over-regulation (80 percent UK; 83 percent globally).
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 three but remains a threat to 63 percent of UK CEOs.
Business bosses are acutely aware of the disruption emerging technologies, such as AI, blockchain and robotics, could cause, with 69 percent of UK CEOs agreeing 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 percent of UK CEOs, compared to 80 percent globally.
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.