Big business backs Britain… but global recession now looms

Bosses back Britain: UK named the third most attractive place in the world to grow a business… but global recession now looms

Britain has caught up with Germany to be named the third most attractive place in the world to grow a business.

In a global survey of chief executives on the most important countries for revenue growth, the UK was level-pegging with its European ally for the first time in the 26 years of the report.

Only the US and China were ranked higher in the poll by auditing giant PwC, published at the start of the World Economic Forum’s (WEF) annual gathering of global business and political leaders in Davos, Switzerland.

The UK was equal with Germany In a global survey of chief executives on the most important countries for revenue growth published at the start of the World Economic Forum in Davos

But in a sign of the ongoing economic crisis, 40 per cent of UK bosses said they have already started cutting jobs or will consider doing so in the next 12 months.

And a separate WEF survey found nearly two-thirds of chief economists at major organisations predict a global recession this year. 

However, most also expected the cost of living squeeze battering firms and households will become less severe by the end of 2023.

The findings come as economies globally suffer the fall-out from the war in Ukraine, which has sent energy and food prices soaring, prompting central banks to hike interest rates sharply.

Amid the upheaval, the PwC survey suggests the UK’s relative attractiveness has improved. It was fourth last year behind Germany in third.

Kevin Ellis, chairman and senior partner at PwC UK, said: ‘Chief executives don’t expand and invest on a whim – they’re choosing the UK as that’s where they expect to see returns. 

That choice will be based on sector strengths in areas like AI [artificial intelligence] and biotech, alongside our people-first, business-friendly environment.’

The boost for the UK defies fears raised that political turmoil culminating in the disastrous mini-Budget in September has damaged investor confidence.

Bank of England Governor Andrew Bailey has said the episode damaged Britain’s reputation abroad. Yet the weakness of the pound makes UK assets look cheap for foreign investors.

At the same time, Germany’s industry-heavy economy has been buffeted by Russia choking off gas supplies. But there is still more work to do to cement Britain’s position, said Ellis.

‘To keep the UK attractive, we need renewed focus on skills and regional growth – both of which will help unlock productivity,’ he said. 

The survey of 4,410 chief executives in 105 countries also revealed a large proportion are worrying that they need radical change if they are to survive. 

It found 39 per cent believed their businesses will not be economically viable within a decade unless they change course.

UK bosses are a bit less worried, but 22 per cent still share that sentiment. Ellis said: ‘Businesses have already undergone massive change this decade, with hybrid working and cloud computing among the big shifts.

‘But this is the tip of the iceberg. Many chief executives 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.’ 

The PwC survey also found that 73 per cent of bosses believe world economic growth will decline over the next 12 months, the most pessimistic since the survey began 12 years ago. 

It is a significant departure from 2021 and 2022, when around three-quarters thought growth would improve.

The WEF’s separate global poll of chief economists found 63 per cent believe a global recession is likely but 68 per cent expect the cost of living squeeze to be nearing its peak.

Saadia Zahidi, managing director at the WEF, said: ‘With two-thirds of chief economists expecting a worldwide recession in 2023, the global economy is in a precarious position.’