Pre-Brexit UK 10th best placed country to deal with change globally

22 August 2017 Consultancy.uk

The UK has been found to be the tenth best positioned country to manage potential economic, societal and political change changes. The news which, considering the unknown quantity of Brexit, will encourage British businesses, came as part of a new study identifying three key areas in which 136 countries are able to manage and deal with change, with Switzerland shown to be the global leader.

In a time of social, political, economic and environmental uncertainty, markets are bracing themselves for a sustained period of societal upheaval and systemic change. In addition to growing crises surrounding climate change, boom and bust economics and increasingly widespread speculation surrounding the use of nuclear weaponry, ageing populations, rapid technological change and dependence as well as shifting demographics are creating a broad array of risk factors for businesses.

To identify in how far different global regions are able to weather these oncoming storms, KPMG has released its latest ‘2017 Change Readiness Index’ report. The Index is derived from scoring six key pillars that relate three key capability indicators, enterprise, government and people & civil society. These, respectively, indicate the ability of businesses and state enterprises, governments, and people & civil society to adapt to various changes. The report also looks at the ability for a society to undergo change, including business capability, government capability and people & civil society capability, extending across 136 countries, and leveraging an Oxford Economics survey of 1,372 national specialists who were asked 26 survey questions, with a minimum of 10 specialists per country.

Highest and lowest performer by region

Top 20 countries for change

Switzerland was found to be the global leader of countries best suited to adapt to future turbulence, scoring within the top five for all metrics – its enterprise capability stands at 2nd, its government at 4th and the Swiss people & civil society score stands at 1st. Sweden took second spot meanwhile, with strong performances in government and people & civil society, where it ranked 3rd twice. Its enterprise score stood at 5th best. The United Arab Emirates (UAE) ranked at number three, sporting the top business capability score, and second top government score, but falling considerably behind on people & civil society.

Singapore and Denmark meanwhile rounded out the top five, with strong performances in government and civil society respectively. New Zealand takes the number six spot, with a top ten performance in all categories, similarly to fellow top ten performers the Netherlands ahead of the UK, who also made the top ten. Sitting in 10th spot, Britain performs relatively well in terms of business capability and civil society, and while this rating may be a source of encouragement to many businesses located in the country, it is brought down slightly by its poorer performance in government. The UK’s position as a market leader has been speculated as deteriorating ever since the 2016 Brexit vote, and the minority Conservative government’s poor form during negotiations with the EU over the UK’s leaving suggest this may be an increasing cause for concern.

KPMG’s research also found that a number of countries outperform and underperform relative to their GDP predicted CRI scores. Rwanda outperformed expectations by around 40%, while Uganda outperformered predictions by around 27%. Sweden and Switzerland too, had significantly higher CRI scores relative to their respective GDP, highlighting how far out in front the frontrunners, both with high GDP, are.

Sudan and Venezuela, meanwhile, underperformed – both are currently blighted with conflict, which continues to negatively affect their respective scores. Libya, which continues to find itself in civil strife, too, finds itself underperform on its ability to deal with change.

The top 20 performers

The firm also looked at the regional best and worst performers, highlighting not only regional trends but also more structural global trends related to where regionally, countries are less able to deal with change. In Northern, Southern & Western Europe, Switzerland was the number one contender, while Greece took 54th spot, the lowest in the region. The Middle East was found to be a relatively mixed bag, particularly having suffered from the legacy of the Iraq and Afghan wars having left the region in perpetual turmoil which led to the rise of ISIS. Less affected by this on one side is the UAE, at number three, while Syria, which has been torn apart by a civil war initially sparked by a prolonged drought, comes in far down the line at number 135.

North America score relatively strongly, with the US out ahead on number 12, while Canada takes 17th spot. Latin America & Caribbean meanwhile hosts a broad range of change-readiness; although its top performer, Chile at 24, is relatively highly ranked, its worst performer, Haiti, comes in at 123rd. South Asia and Sub-Saharan Africa are the lowest ranked regions, starting at 43rd and 46th respectively.

Biggest movers

The analysis also explored which three countries have enjoyed the biggest improvement, and which three saw the highest level of deterioration. Researchers noted that, aside from the top three, China, the US, India and Indonesia, all saw improvements in the latest report, due, in part, to increases in enterprise and government capability.

Most improvement

Bhutan saw the biggest increase, jumping 35 places overall – an improvement largely attributed to improvements in business and government capability. Romania saw a strong improvement in government capability boost its performance by 32 places, while Italy climbed 28 places, largely based on improved business and government scores.

Cambodia, El Salvador and Cape Verde, all saw significant decreases in their respective scores, falling 30, 31 and 32 places respectively. Cape Verde’s business environment saw considerable deterioration (47 places), while El Salvador and Cambodia both saw declines of 30 places each in government capability.

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