Reality check for UK CEOs: PwC Global CEO Survey reveals confidence levels remain high, but note of caution as skills remain a key concern

"Our 2015 Global CEO Survey shows that UK CEOs are more confident than their European peers, but the high levels of optimism we saw last year have been tempered by concerns about access to key skills, disruptive trends and geopolitical uncertainty. Despite more caution there is a healthy appetite for M&A as more UK companies look to do deals overseas.” – Ian Powell, UK chairman and senior partner, PwC

UK CEOs are the most confident in Europe, according to PwC’s 18^th annual Global CEO Survey published at the World Economic Forum in Davos.  Three out of five (61%) UK CEOs believe there are more growth opportunities for their company today than three years ago – more than any of their European peers.

85% of UK business leaders are confident about their company’s prospects for the year ahead, slightly down from 93% 12 months ago. However, after the bullishness of 2014, this year’s survey reveals a greater divergence in optimism levels amongst UK CEOs. 39% are ‘very confident’ about their company’s fortunes for the year, up from 27% in 2014. Yet the number not confident about the next 12 months has doubled to 15%, from 7% in 2014.

Views about the short-term may be mixed, but 95% of UK business leaders are confident (with 52% very confident) about growth prospects for their own company over the next three years. This is above the 92% global confidence level and, across Europe, only more Spanish CEOs (63%) are very confident about long-term growth. Russian CEOs have gone from the most optimistic to least optimistic in the space of 12 months. Confidence is down in other oil-producing nations such as the Middle East, Nigeria and Venezuela.

UK CEOs are among the most upbeat about the growth prospects for the global economy over the next 12 months, with 41% anticipating an improvement. While this is down from 61% last year, it is still above the global average (37%) and, in Europe, only Nordic CEOs are more optimistic. Notably, though, nearly one in five (18%) of UK CEOs believe the global economy will decline in the year ahead, whereas none held this view last year.

When asked about the most important countries for UK company growth in the coming year, 48% of UK CEOs said the US, followed by Germany (41%) and China (26%).  Global CEOs ranked the US ahead of China as an important market for growth for the first time in five years.

The importance of overseas markets to the UK is reflected in bold strategies for growth. 38% of UK leaders plan to complete a cross-border M&A transaction this year – almost double the number planning to do a domestic deal (20%) - and well above the global average of 27%.”

 

The skills gap

However, the biggest headache for UK leaders is access to skills. The number concerned about the availability of key skills has risen considerably from 64% in 2014 to 84% this year. This is a greater worry for UK CEOs than their global peers (73%), and significantly higher than for those in France (37%), Germany (54%) and Spain (53%).

UK CEOs recognise that they cannot bridge the talent gap alone. Two thirds (67%) believe that a priority of government should be to create a skilled and adaptable workforce, up from 60% last year. Just 26% believe the government has achieved this.

 

Ian Powell, chairman and senior partner of PwC UK, commented: “Last year we saw a sharp rise in confidence as the UK economy appeared to turn a corner. While confidence remains high, there is no room for complacency.” 

“A keen focus for UK CEOs is how the UK develops the right skills to compete globally. Our Survey again highlights the pressing need for the government, business and education sectors to work together to enable the UK to prosper in the long-term. There has been good progress with apprenticeship schemes, but we need to build on this success to ensure that skills and opportunities are matched.”

 

Digital focus

This year’s Global CEO Survey highlights the impact of the digital revolution on business. 59% of UK CEOs are concerned by the speed of technological change, up from 55% last year, and one in three (33%) believe that a potential competitor to their business is emerging or could emerge from the technology industry.

62% of UK CEOs are concerned that changes in technology will disrupt the core provision of their products or services, nearly four times the number of German CEOs concerned (16%). Changes in customer behaviour are also a worry, with 72% of UK CEOs seeing this as disruptive, compared to 41% of German CEOs.

UK business leaders recognise that they need to lead by example when it comes to embracing digital. Nine out of 10 (89%) believe that the CEO championing the use of digital technologies is the most important factor in helping their organisation get the most out of digital investments.

Ian Powell concluded: “The potential for the digital era to disrupt markets and the way companies do business is ever more apparent, and UK CEOs appear to be acutely aware of the risks and the potential rewards. Our business leaders know they need to embrace technology at the core of their organisation. Nine out of 10 UK CEOs believe they need to have a clear vision of how technologies can help achieve competitive advantage in order to become digitally fit for the future.”

 

Notes to editor:

 

About the PwC Global CEO Survey

For PwC's 18th Annual Global CEO Survey, 1,322 interviews were conducted in 77 countries during the last quarter of 2014. By region, 459 interviews were conducted in Asia Pacific, 455 in Europe, 147 in North America, 167 in Latin America, 49 in Africa and 45 in the Middle East.

The full survey report with supporting graphics can be downloaded at www.pwc.com/ceosurvey.

 

About PwC

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

©2015 PwC. All rights reserved

 

For more information contact Jamie Harley, head of media relations, 020 7212 2688 / [email protected]