Investors see UK as third most important country for company growth prospects, says PwC research

• London is considered the 2nd most important city for growth prospects over the next 12 months

• Investors focused on tech and financial industries in particular put the UK among the top three countries important for growth

The Brexit vote and the uncertainty surrounding the UK’s future relationship with the EU don’t appear to be deterring investors. The UK is seen as a more important country for growth by investment professionals, moving up from fourth place last year to equal third with Germany this year, behind only the USA and China.  This is according to analysis by PwC from interviews and data from over 550 global investment professionals and over 1,300 CEOs.

London is considered the 2nd most important city for growth prospects over the next 12 months, behind New York and followed by Beijing, Shanghai and San Francisco.

Hilary Eastman, head of global investor engagement at PwC, said:

“It’s striking that the UK is now seen as more important for growth, particularly by investment professionals, moving up from fourth place last year to joint third place with Germany this year. Those focused on the technology and financials industries in particular put the UK among the top three.

“But ‘importance’ may or may not equate to ‘positive growth’ and therefore optimism. Importance could be interpreted in a positive light – that the countries selected would be those expected to grow most or fastest. On that basis, the Brexit vote and all the uncertainty surrounding the UK’s future relationship with the EU appear not to be deterring investors. However, some investment professionals we spoke to saw that ‘importance’ could also be interpreted in a negative sense – that problems and greater volatility in the UK, for example, could have an important effect on slowing down companies’ growth.”

Key global findings

• 45% of investors and analysts said they were very confident (2016: 22%) about global economic growth.

• Increased investor confidence in global economic growth prospects has fed through into their expectations for company-specific growth prospects over the next 12 months.

Globally, uncertainty remains. Investment professionals perceive geopolitical uncertainty as the top threat to company growth prospects. Protectionism, the future of the Eurozone and social instability also rank highly. In addition, almost one in five (19%) think technology will completely reshape competition within five years, 85% expect automation to reduce company headcount.

Hilary Eastman added:

“Investment professionals around the world are upbeat about global economic growth prospects, despite recognising the shifting political landscape in which companies operate. They certainly don’t expect the globalisation process to stop or be reversed. But like CEOs, investors do think it is becoming harder for business leaders to balance competing in an open global marketplace with trends toward closed national policies.

“Investors and analysts want companies to understand the markets they enter, act in socially responsible ways and support local economies.”

The research identified a number of areas in which companies could improve their current communications with investment professionals and other stakeholders, including their approaches to supporting innovation, the need for a strong corporate purpose and values, and steps being taken to prevent cyber attacks and data breaches. Companies also need to give clearer explanations of how they see global economic prospects, and how these affect their own growth prospects.

Reflecting the ongoing tension between companies focusing on short term versus long term strategies and return on investment (ROI), investment professionals (70%) were less concerned than CEOs (85%) about companies running their business in a way that responds to wider stakeholder expectations.

Hilary Eastman concluded:  

“There is evidence of an expectation gap, with investment professionals wanting companies to focus simply on running the business, regardless of the fact that CEOs feel pressured to follow a stakeholder-inclusive approach. The emphasis CEOs place on corporate purpose is also striking. Both point to CEOs’ need to explain their thinking more clearly so that investment professionals’ views become more closely aligned with theirs.”

Despite the high profile debate about trust in business, a large minority of investment professionals (32%) view this more positively and do not agree that it’s harder for companies to gain and keep trust.  However, investors put cyber security, data privacy breaches, and IT outages and disruptions at the top of their list of concerns about digital issues which could negatively impact stakeholder trust.

Ends

Notes to editors

• Hilary Eastman is available for interview - please contact Katherine Howbrook on 020 7212 2711/07595 609 737 or [email protected]

• PwC obtained feedback from 554 investment professionals who responded to an online survey running in November and December 2016. We also conducted in-depth interviews with 38 individuals from a range of regions between November 2016 and January 2017. Separately, PwC conducted 1,379 interviews with CEOs in 79 countries for the 20th Annual PwC CEO Survey between August and November 2016. For more information see www.pwc.com/investorsurvey.