There are mixed sentiments among the UK’s CEOs as growing positivity about the global economic outlook continues to be offset by concerns about the longevity of their companies’ own business models.
A majority of UK CEOs (61%) expect the global economy to improve over the next 12 months – which is far greater than last years’ prediction (21%) and exceeds the global average of 38%, according to PwC’s latest Global CEO Survey.
However, there has been little change in optimism with regards to business leaders’ own companies. A fifth (21%) of UK chief executives believe their business will not be economically viable in 10 years’ time, unless changes are made. This represents a single percentage point on last years’ figure.
Meanwhile global CEOs are even more pessimistic, with 45% believing their current business model is not sufficient to keep the company afloat for another decade.
The annual survey, based on interviews with 4,702 CEOs across 105 countries, is considered a good barometer of the economic and business climate for the year ahead.
UK chief executives are seeking game-changing opportunities
With expectations that a drop in inflation will soon be followed by a reduction in interest rates, making the cost of borrowing and investment cheaper, the economic outlook is rosier than it was 12 months ago. Although, there is less confidence in the UK’s own economic recovery – just 39% of the 105 UK CEOs are anticipating an improvement – this is far greater than the 9% who expected to see the UK economy grow in 2023.
“Britain’s bosses may not be brimming with confidence in the UK economy, but a three-fold increase in the number expecting it to improve should not be sniffed at,” says Kevin Ellis, chairman and senior partner of PwC’s UK and Middle East Alliance.
UK CEOs lead on AI adoption
This improved confidence is reflected in the fact that almost half (48%) of UK CEOs are expecting to increase their company’s headcount by 5% or more over the next 12 months and more than half (53%) hope to make at least one major acquisition. This supports recent predictions that M&A activity is set to increase in 2024 as inflation eases.
UK companies are also well positioned to capitalise on any potential benefits from AI adoption. Some 42% of UK chief executives claim to have implemented the technology in their businesses, in contrast to the 9% of their German peers and 20% of French CEOs (the global average is 32%).
This is being driven by the fact that UK business leaders are more confident that investment in generative AI will result in commercial benefits for the business – 45% believe revenues will be boosted as a result of AI within 12 months and 64% believe the tech will increase employee efficiency.
This willingness to invest in tech and strategic acquisitions will only support economic growth in the year ahead, Ellis adds. “After an uphill trek against economic headwinds, UK chief executives are seeking game-changing opportunities,” he says. “The UK’s service-based economy makes it ideally placed for the generative AI revolution – but building tech is only half the battle, ensuring people and businesses can use it is key.”
A wake-up call for UK CEOs
A renewed focus on financial growth has not come at the expense of environmental initiatives. Climate change remains a key concern for UK CEOs, with 85% having either completed or begun working towards reducing energy consumption and improving efficiency.
The global perception of UK businesses remains more positive. It remains first choice among US CEOs looking to invest abroad and has jumped from 16th to 6th for Chinese business execs. However, the UK’s strategic importance on the global stage has dropped slightly, falling from joint third to fourth, behind the USA, China and Germany.
Ellis adds: “The UK’s standing on the world stage has proved pretty resilient, particularly among the biggest powers and global investors. There’s no doubt it remains an attractive place to live, work and invest. But we can’t be complacent — any slip in the ranking serves as a wake-up call.”
