Nearly one in four chief executives in the UK believe their current business model will no longer be viable within 10 years’ time, according to a vast annual survey published at the World Economic Forum in Davos.
Yet the 22 per cent of executives in Britain who foresee being forced to change course as a result is considerably lower than the global figure of 39 per cent who felt that their business models would no longer be viable by 2033, the survey by accounting giant PwC found.
Business chiefs in Britain were similarly bullish about their own companies’ prospects for the year ahead in comparison with their grim general outlook for the global economy.
Just 21 per cent said they expect the economy to improve over the next 12 months – but nearly half of those surveyed asserted that they were nevertheless “very or extremely confident” about their own businesses’ revenue prospects over that period.
The findings – from PwC’s survey of nearly 4,500 chief executives in 105 countries – represent a colossal fall from the 86 per cent of UK executives who expected the global economy to improve a year ago.
Those in top roles elsewere in the world were even more pessimistic, with 73 per cent expecting global growth to decline this year, the gloomiest outlook since PwC first asked the question 12 years ago.
Faith in the UK’s growth prospects appears to be shared by global executives, as the FTSE 100 approached an all-time high on Monday, with Britain now viewed as the third most important country for growth among global CEOs, joint with Germany, and behind only the US and China, PwC found.
But as many as one in 10 UK executives believe they have just three years to make the necessary changes to keep their businesses economically viable, with 40 per cent admitting their firms’ tech capabilities lag behind the demands of their strategic objectives.
As a result of these turbulent conditions, just six in 10 executives in the UK said they would not impose staff layoffs, while 86 per cent vowed not to reduce employee pay.
The vast majority of UK executives said they were automating processes and systems, and upskilling their company’s workforce in priority areas – meaning that all but 4 per cent said they were not confident about their revenue growth prospects in the next three years.
The “Big Four” firm’s chair, Kevin Ellis, said that PwC’s findings showed the “massive” changes to business this decade, such as the shift to hybrid working, was just “the tip of the iceberg”, with “fundamental changes” ahead.
And he warned that the huge challenges facing firms – of decades-high inflation and skills shortages – “could be overwhelming”.
“Businesses have already undergone massive change this decade, with hybrid working and cloud computing among the big shifts,” said Mr Ellis. But this is the tip of the iceberg – many CEOs believe their current business models are unsustainable and this means more change ahead.
“This isn’t about tinkering but fundamental changes requiring big investment in people, skills and technology. It’s positive businesses are focused on making the changes needed, despite challenges including inflation and skills shortages which could be overwhelming.”
A report by the WEF last week warned that, although climate breakdown is the global economy’s biggest long-term challenge, it is one that the world is least prepared to tackle because of short-term problems fuelled by the cost-of-living crisis.
Correspondingly, PwC found that more than a quarter of UK executives fear they are moderately or extremely exposed to climate threats over the next 12 months – but less than a third have implemented measurable, data-driven strategies to reduce emissions and mitigate climate risks.