CEOs stay confident

CHIEF executives of UK firms are cautiously optimistic about their business growth prospects according to research released today.

However globally the confidence of CEOS about the prospects for business growth has declined for the first time since 2003, the PricewaterhouseCoopers 11th Annual Global CEO Survey found.

The worldwide survey of 1,100 CEOs showed that in the UK 43% of those questioned are confident that their business will grow in the next 12 months compared to 50% last year.

However the survey found that UK-based CEOs will bolster their growth plans with some of the most active merger and acquisition (M&A) and geographic expansion plans globally. They temper their outlook with ongoing concerns surrounding availability of key skills and the rising cost and complexity of running business in the UK including tax, regulatory, people and energy issues.

The survey found:

• 43% of UK CEOs are 'very confident' and 45% 'somewhat confident' about revenue growth over the next 12 months. Over the next three years, almost a third (29%) are 'very confident' about growth prospects – 13% less than the global average;
• Around 43% of UK CEOs are planning a cross border M&A in the next 12 months, compared to 31% globally;
• UK CEOs identified the availability of key skills (61%), a downturn in major economies (57%) and over-regulation (55%) as the top three barriers to growth;
• The tax regime (26%), labour laws (20%), education (12%), planning laws (12%) and healthcare (12%) are the top five areas the UK government could potentially improve according to the CEOs surveyed;
• A significant 92% of UK CEOs say the people agenda is now a top priority. Some 77% believe their time is best spent dealing with the issues, and two thirds believe their HR organisation is not equipped to adequately compete for talent;
• More than a third of UK CEOs believe climate change will benefit their business economically although only a quarter claim to be investing significant resources to address the risk and opportunities of climate change. Almost half of UK CEOs, however, show no concern for the impact of climate change on their business prospects;
• UK CEOs are less concerned about intellectual property rights than their global peers, suggesting intangible assets – potentially the sources of UK competitive advantage in a global marketplace – may be under-protected.

Ron McMillan, northern chairman of PricewaterhouseCoopers, commented: “Although overall confidence about growth has declined, M&A activity is expected to remain robust and the outlook is not entirely pessimistic.

“The ability of business to attract, develop and retain the right people is now the business critical issue for both the UK and the emerging economies.”