Around 75% business leaders in UK expect recession in 2023: BCG

Business leaders are much more optimistic about the medium term. Sixty-one per cent expect economic growth to be somewhat or significantly better in 2025, challenging the view that the UK is slipping into a medium-term malaise. This optimism extends to their own firms with 63 per cent of leaders thinking their business’s revenues will grow over the next three years, according to the BCG report titled ‘State of UK Business 2023: Squeezed but Still Standing’.

While the Office for Budget Responsibility (OBR) and Bank of England (BoE) forecast unemployment to rise sharply this year, the survey found that over three quarters or 77 per cent of senior leaders expect their headcount to stay the same or grow over the next twelve months, well exceeding the 20 per cent who expect it to reduce.

Inflation may prove more persistent than expected. Fifty-six per cent of business leaders say they will continue to increase prices over the next six months, a finding which holds across all sectors and businesses of all sizes.

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

Contrary to many headlines, there is also a lot of positivity towards new ways of working. Only 8 per cent of business leaders said that the move to remote working has had a negative impact on staff performance. Nearly a third or 29 per cent of business leaders said they had hired purely remote workers in response to labour shortages too.

Business leaders are prepared to pursue sustainability priorities even though they know it will be costly. Sixty-three per cent of leaders say that an economic downturn will either increase their company’s prioritisation of environmental sustainability or have no impact. This is despite 60 per cent saying it will increase their costs over the next five years.

There is no clear consensus amongst business leaders on which specific policy changes would positively impact their firms. This highlights the challenge in making policy to support businesses across the economy in the current environment. The policies that ranked highest with business leaders were focused on boosting businesses margins, such as tax reductions and simplifications, but no one policy change achieved support from more than a third of business leaders. added report. 

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.”

The report is a broad and comprehensive survey of over 1,500 UK business leaders from firms of all sizes covering the breadth of the economy.

ALCHEMPro News Desk (NB)