UK firms maintain higher business optimism than global average

Ireland is the only country to register a higher degree of positivity than the UK. The latest results show that inflation expectations remain stubbornly high at 51 per cent, but have eased from earlier in the year at 59 per cent. This is especially true for staffing costs, where a net balance of 72 per cent of businesses predict wages to rise over the next 12 months, again down from 77 per cent in February. The research suggests that most companies are raising their prices to offset the impact of higher costs, according to the latest Accenture/S&P Global UK Business Outlook.

In total, 45 per cent of firms forecast an increase in their prices. This figure has fallen steadily over the last 12 months but remains three times higher than the proportion of firms at 15 per cent expecting a net gain in profits.

Strong expectations for business activity in the UK were reported alongside positive predictions for employment at 21 per cent, capital expenditure at 5 per cent, and research and development spending at 3 per cent.

Manufacturers plan to increase capex spending by the greatest amount in over a year, as they look to boost automation and raise productivity. That said, with interest rates set to remain high and dampening demand, overall manufacturing output expectations dropped to 43 per cent, down -10 per cent on February.

UK companies were more likely to be planning to invest in artificial intelligence (AI) in June, jumping to 29 per cent of respondents from 18 per cent in early 2022.

Commenting on the findings, Matt Prebble, strategy and consulting lead for Accenture in the UK and Ireland, said: “British businesses continue to be resilient and optimistic, despite the current economic challenges. Although still a concern, businesses expectations on inflation and staffing costs are falling, a trend that is required to ease margin and pricing pressures.

“In an era of high inflation when many firms’ margins are under pressure, the question for executives is how to transform and reinvent themselves despite these immediate challenges. It is encouraging to see that British firms are already taking action on this front by investing now to improve productivity, including new investments in advanced technologies like AI and automation.”

ALCHEMPro News Desk (NB)