Demystifying the future – our predictions for the year ahead, and beyond!

12 February 2013

By David Lancefield, Economics and Policy Partner and Yih Lin Teh

"If you can look into the seeds of time, and say which grain will grow and which will not, speak then unto me," so said William Shakespeare. Whether we can or not, we’ve come up with our views on the issues that really matter to business and government over the coming year, and beyond. We hope they give you a nudge in the right direction. If it whets your appetite, we’d be delighted to explore how you can make the most of the year ahead.

We find that executives in high-performing organisations think hard about changes in behaviour, tipping points and events in the markets they operate in. They develop predictions on the ones that matter. And they debate the direction, likelihood and impact of these predictions, encouraging different perspectives from within and outside the organisation.

We have identified five big themes which will shape the way businesses, governments and investors operate:

1. A world economy in transition

With growth increasingly driven by the Asia-Pacific region, we are experiencing a prolonged structural adjustment in mature western economies - contributing to a "New Normal" of slow growth and volatility, and the continuing challenge of climate change.

2. The legacy of the financial crisis

The process of adjustment in the financial sector and of balance sheets is far from complete; public finances are still badly in need of repair and there is no certainty as to the resilience and capitalisation of the banking sector.

3.  Digitally-fuelled growth

Providing opportunities for new entrants, and for disruption of traditional sectors. Examples include the 4G auction, the rise of public and private consumption data, and digital identities and smart metering.

4.  New forms of commissioning, management and delivery in the public sector

Affecting health, education and other public services, as governments strive to manage their financial commitments more effectively and increase efficiency and service quality. The public sector will encourage more private sector collaboration, outcomes-based structures and technology-driven innovation all to deliver better value for citizens.

5.  Further evolution of regulatory structures and policy frameworks

To address the changed world that is emerging in the "New Normal", and creating new challenges for businesses to engage with policy-makers and regulators on multi-year and/or devolved programmes of reform.

Our predictions set out the big picture of what the world may look like in the medium term. But what decisions will you take, prompted by these predictions? What’s clear is that economic, technology, policy, regulatory and environmental context will demand:

  • Courage in making difficult choices, whether to pursue new, sustainable growth opportunities or to exit unprofitable markets.
  • Innovation in meeting your customers’ needs, particularly using new digital technology.
  • Honesty about your comparative strengths and weaknesses against existing and future competitors.
  • Speed in making decisions at a pace that reflects the consumer and competitive context you face.

Check out http://www.pwc.co.uk/economic-services/issues/uk-economic-predictions.jhtml, grouped in to three areas: (1) growth, particularly the economy; (2) industries; and (3) disputes and investigations.

David Lancefield:
Read profile | Contact by email | Tel: 020 7213 2263

Yih Lin Teh:
Contact by email | Tel: 020 7213 5368

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