Analysis from PwC’s annual global CEO survey shows that, against the background of an uncertain and volatile global economy, UK business leaders’ confidence remains constrained by concerns over short term growth prospects. Only 22% said they were very confident about growth prospects in the next 12 months, compared with 36% of CEOs globally.
The findings from the UK CEOs polled for the survey, the 16th carried out by PwC, indicate that in the next 12 months they intend to focus on cutting costs (83% - well above the global average), prioritising investments that will grow their customer base 62% (compared with 51% globally), improving operational effectiveness 54% (49% globally ), enhancing customer service 52% (38% globally ), and engaging in new M&A/joint ventures/strategic alliances 40% (33% globally).
The issues that UK CEOs said gave them the most concerns were the government’s response to the fiscal deficit and debt burden, uncertain/volatile economic growth, over-regulation and the lack of stability in capital markets. But they also perceived key threats to their business coming from insufficient access to the skilled workforce they need, the availability of finance, and high energy and raw material costs.
Ian Powell, UK chairman and senior partner, PwC said:
“As UK businesses ride out the current uncertain period, in which 'more of the same' is the expectation of many economists, the question is whether the actions being taken now will equip them to adapt, grow and seize future opportunities. “
Pursuing business opportunities requires confidence in the future, and when UK CEOs were asked about their confidence over revenue growth for the next three years, their views were in line with their counterparts across Western Europe, with around one-third being ‘very confident’. However, confidence among CEOs in other parts of the world is far higher, for example in Mexico (61%), rising to 79% across Africa, and an overwhelming 85% in India.
In their bid to keep their organisations ‘resilient’, UK CEOs said they were looking at a number of growth areas. Just over a third (38%) see opportunities for organic growth in the home market, with 24% citing new products or services. The countries favoured for overseas growth are the US, China, France and Germany.
Perhaps surprisingly, more UK CEOs are looking closer to home and expecting greater domestic growth as their key growth opportunity. Only 14% of UK CEOs are targeting organic growth in an existing foreign market (compared to 36% of German and 37% of French CEOs).
UK CEOs voiced the strongest intentions of any country to enter new strategic alliances or joint ventures. The UK also has the highest proportion of business leaders intending to complete a domestic M&A deal, at 43% compared with a Western European average of just over a quarter.
On the positive side, this finding suggests that UK businesses are actively seeking out opportunities to generate real growth in their mature home market but it may also mean that their acquisition strategies are staying more within their domestic ‘comfort zone’ than those of their international competitors.
UK CEOs rate the availability of key skills as a bigger worry than their counterparts in any other Western European country and they are looking to Government to help them. Asked what should be the government’s priorities for business, four out of five UK respondents said creating and fostering a skilled workforce¾the highest proportion in any country surveyed, and well above the global average of 57%.
They also claim they’re prepared to pay for the right skills, with two-thirds planning to increase investment in building a skilled workforce over the next 12 months, and 45% saying they’ll increase headcount next year. However, in today’s challenging environment, still a third of UK CEOs are planning to cut headcount during the next twelve months, against just 23% globally.
For PwC's 16th Annual Global CEO Survey, 1,330 interviews were conducted in 68 countries during the last quarter of 2012. By region, 449 interviews were conducted in Asia Pacific, 312 in Western Europe, 227 in North America, 165 in Latin America, 95 in Central & Eastern Europe, 50 in Africa and 32 in the Middle East. Interviews were conducted with 63 UK CEOs.
The full global survey report with supporting graphics can be downloaded at www.pwc.com/ceosurvey.
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