Tuesday, August 4, 2020

Confidence dips in world economy, but global CEOs say they’ll back Britain after Brexit

Confidence in the global economy has fallen sharply among the leaders of Britain’s biggest businesses, according to a new survey from KPMG.

The 2019 KPMG CEO Outlook reveals that less than half of UK leaders are confident in the prospects for global economic growth over the next three years. This is a significant fall of 34 percentage points year on year and reflects deep-rooted concerns over geopolitical stability, trade wars and the persistent rise of economic nationalism.

Yet, despite uncertainty around Brexit, KPMG’s survey shows that a significant proportion of CEOs from some of the world’s largest economies still view the UK as an attractive investment destination.

Chief executives from the US, China and Japan – the UK’s top investor and the world’s second and third biggest economies – say they are on average now more likely to invest in the UK post-Brexit.

Closer to home, the uncertainty has taken its toll on investor sentiment in Europe. CEOs based in France, Germany, Italy, Spain and the Netherlands say they are on average now less likely to invest in the United Kingdom after the country leaves the EU.

Bill Michael, Chairman and Senior Partner at KPMG in the UK, says: “These are testing times for chief executives in the UK. The continued uncertainty over Brexit has made it harder for leaders to make big calls on investment. At the same time, disruption from emerging technology, climate change and fragile geopolitical and trade conditions have created one of the most complex backdrops to operate against in recent times.

“Yet CEOs are resilient – there is life after Brexit. They are optimistic about their own organisation’s prospects, the prospects for future economic growth in this country and the contribution they can make. These results demonstrate we must have faith in business and a market-based economy as the best way to deal with the economic and social challenges of today.”

In this year’s survey, CEOs zeroed-in on three big risks to growth. Emerging technology rose up the risk agenda to number one, slightly ahead of climate change and economic nationalism.

However, despite technology dominating UK CEOs’ risk agenda, only one in two leaders believe they need to improve the way they innovate. This was the lowest rate seen across the 11 countries surveyed. By contrast, 80 percent of Dutch CEOs say they see a need to improve their innovation processes and execution.

Bill Michael says: “A sustainable business must, ultimately, have a backbone of creativity and innovation. Getting this right is critical, or companies will struggle to react to rapid changes in the market and the threat of new digital entrants. For many, it’s transform or die.”

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