UK chief executives are investing heavily in their people and future growth this year despite rising global risks, according to PwC’s Annual Global CEO Survey published at the World Economic Forum in Davos.
The survey of over 1,400 global leaders, including 105 UK chief executives, reveals that 84% of UK chief executives are confident in their company’s prospects for the year ahead, and a third are very confident. This level of confidence is slightly down on last year, where 85% were confident, although 39% were very confident.
Two thirds of UK business leaders plan to increase the size of their workforce in 2016, more than any of their European peers and most of their global peers. This number is up sharply from last year, when 49% of UK CEOs expected to increase headcount. Only CEOs in Mexico and India are more inclined to hire this year.
UK business leaders are not just looking at hiring more people, but also investing in their current workforce. UK CEOs have a stronger focus than their global peers on changing their workplace culture and behaviours, managing their talent pipeline and changing pay and incentives. However, the availability of key skills remains a concern for seven in 10 UK CEOs, despite being overtaken on this year’s risk list by geopolitical uncertainty and cyber security.
While people remain at the heart of UK companies’ plans for future growth, this year’s PwC Annual Global CEO Survey suggests that UK organisations are getting to grips with technological change quicker than their global peers. 86% of UK business leaders see technological advances as the most significant disruptive trend which will transform their industry, compared to 77% globally. Accordingly, 95% of UK CEOs plan to make changes to how their organisations use technology as they embrace the digital revolution and plan for future success.
The number of UK CEOs who say that the speed of technological change is a threat to their growth prospects is down slightly to 56%, from 59% last year, and is below the global figure of 61%.
The CEOs of UK companies plan more M&A activity in the next year than any of their European peers – 64% plan to complete a domestic or cross-border deal, compared to 58% last year. The UK’s attractiveness as a place to invest also remains high, with the UK ranked as the fourth most important country for growth for global respondents, behind only the US, China and Germany.
UK CEOs remain confident in their own businesses’ prospects, yet there are growing concerns about the global economy and the number of threats their businesses face. Three in 10 think the global economy will improve this year, down from 41% last year, and the number who think it will decline has risen to nearly a quarter (23%), from 18% last year and none in 2013.
Sixty-one percent of UK CEOs see the US as the most important country for their growth over the next 12 months, followed by China (37%) and Germany (35%). While China’s economic rebalancing, falling crude oil price, and geopolitical security concerns are all impacting confidence in the global economy, it’s important to keep in perspective that the UK’s major export markets are the US and Europe, which account for around two-thirds of overseas sales.
Ian Powell, chairman and senior partner of PwC UK, said: “CEOs are putting people front and centre of their plans for future growth. It is encouraging that UK business leaders are holding their nerve against the uncertain global economic and geopolitical backdrop by planning to invest in creating new jobs and developing their people. This longer-term investment should position UK companies well in the future.
“Overall, CEOs are not letting concerns about the global economy derail their longer-term growth and investment plans. They are still confident about their own companies’ prospects for the year ahead, and nearly two thirds plan to expand via a merger or acquisition. The UK remains a bright spot for growth prospects globally, and maintaining the UK’s position as an attractive place for companies to invest will be vital to the country’s longer-term recovery.
“While unemployment is still falling and the level of vacancies is at its highest point for well over a decade, skills shortages remain an issue. Businesses and the Government have made important moves to tackle the UK’s skills gap, such as making apprenticeships schemes more widely available and visible. Greater focus is needed on training and mobility to further close the skills gap.”
More than half of UK business leaders see more threats to their business today than three years ago. Over regulation remains the top perceived threat for the third year in a row (82%), but it is no surprise that geopolitical uncertainty has risen to become the second biggest concern, cited by 80% of UK CEOs.
Cyber security is another growing focus area and is now considered the third greatest threat, with 74% of CEOs saying they are concerned. UK CEOs are more alert to the threat of cyber-attacks than most of their global counterparts (global average 61%). CEOs in the US are most concerned, with 88% citing it as a threat to their organisation’s growth.
Powell said: “UK business leaders see threats to their business coming from new and more complex sources. Cyber security has rapidly risen up CEOs’ list of concerns and businesses can’t afford to ignore cyber risks any longer.
“Despite the global economy’s eventful start to the New Year, continued investment spending by UK businesses should continue to support and reinforce the UK’s balanced economic recovery and long-term prospects.”
