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As Economic Challenges Grow, What are UK Business Leaders Predicting for 2023 and Beyond?

Recent years haven’t been kind to UK businesses, with the effects of a worldwide pandemic and rising interest rates representing only a portion of the hurdles set out for firms. As around 75 per cent of business leaders expect a recession in 2023, it does not appear as though challenges will reduce. Despite this, Boston Consulting Group‘s latest survey highlights why it might not all be doom and gloom for UK businesses.

Boston Consulting Group‘s Centre for Growth Survey: State of UK Business 2023: Squeezed but still standing, surveyed over 1,500 UK business leaders covering the breadth of the economy.

Business leaders appear to be more optimistic about the medium term. Sixty-one per cent predict economic growth to be “somewhat” or “significantly” better in 2025.

This optimism appears linked to expectations regarding their own firms – 63 per cent of leaders believe their own business revenues will grow over the next three years.

Although the Office for Budget Responsibility and Bank of England forecast unemployment to rise sharply this year, the survey found that 77 per cent of senior leaders expect their headcount to either stay the same or grow over the next twelve months. Only 20 per cent of business leaders expect to see a reduction in the number of employees over the same time period.

Inflation looks set to affect leaders and consumers at all levels, as 56 per cent of respondents revealed they plan to continue to increase prices over the next six months. This finding held across all sectors and businesses of all sizes.

The UK Business Resilience Index, constructed by the Centre for Growth, assesses UK businesses’ resilience and highlights concrete actions which can boost resilience and are positively correlated with both historic and future expectations of revenue growth. Such actions include supply chain diversity and flexible working practices.

Positivity remains across all areas of UK business

The survey also revealed a lot of positivity towards new ways of working. Only eight per cent of business leaders said that moving to remote working had a negative impact on staff performance. Nearly a third (29 per cent) of business leaders said they had hired purely remote workers in response to labour shortages too.

Survey respondents also revealed that they are prepared to pursue sustainability priorities. Sixty-three per cent of leaders said that an economic downturn will either increase their company’s prioritisation of environmental sustainability or have no impact. These numbers come despite 60 per cent saying it will increase their costs over the next five years.

Raoul Ruparel, director of BCG’s Centre for Growth, commented: “It is easy to get downbeat about the UK’s prospects both in the short and medium term but those running our businesses tend to be more optimistic.

“Business leaders are anticipating a short-lived downturn with the labour market likely to remain stronger than expected. It’s also encouraging to see that an economic downturn will have little to no impact on business leaders’ prioritisation of environmental sustainability and net zero.

“UK businesses are undoubtedly feeling squeezed, but they’re still standing and, in many cases, looking optimistically to the future.”

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