UK companies relatively upbeat about economy in wake of Brexit vote

20 October 2016

UK companies are relatively upbeat about economic conditions – even in the wake of the referendum vote to leave the EU, finds a study by BDO. Manufacturers, for instance, are currently enjoying single market access with a considerably lower sterling, services firms, however, remain concerned about the long-term prospects and a potential loss of market access. Companies expect inflation to increase on the back of higher import costs, while hiring trends remain relatively positive and stable after recent declines.

The referendum result in favour of leaving the EU resulted in an immediate depreciation of the sterling, while a downward trend has seen it fall to the lowest level in more than three decades. While political discussion surrounding the triggering of Article 50 gain steam, the latest BDO ‘polls of polls’ of four key business metrics sees the first upticks since what is likely to become one of Britain’s larger historical events.

The study by the accounting and consulting firm combines major business surveys* across the UK into a single index – providing an insight into how businesses across the UK currently feel about the economic climate. The index sets 100 as an average trend growth, while any score greater than 95 represents positive growth.

BDO Optimism Index

The index for business optimism increased slightly between July and September, to 99.5, after falling from its height in May of last year. Across industries however, there is a mixed bag of results. At services firms, confidence remains above that average confidence at 101.1, falling slightly from August’s 101.2. Optimism has been hampered slightly, according to the firm, as a result of continued post-Brexit uncertainty. Manufacturers remain relatively gloomy at 91.3, although light appears to be shining at the end of the tunnel, on the back of lower sterling, increasing the value of exports, with optimism up 5.5 points on the previous poll result.

BDO Output Index

The output index too has seen a considerable contraction as it plummeted from a level of almost 105 in September last year to 96.9 in the latest poll. The steep decline is partly due to concerns from the service sector, which is contending with uncertainty about the loss of single market access. Manufacturing has had a slightly positive boost to its index score, lifted by the lower sterling, which is increasing the net value of its exports via a vis international rivals, up from 93.9 in August to 95.1 in September. 

BDO Inflation Index

The Inflation Index has increased slightly from a six year low seen last year, at below 95, to 102.4 today, as firms expect price increases to trend above the long-term average in the near future. The hike is the result of the slide in the sterling, which in September fell to $1.28 against the dollar, and, which has since depreciated further to just over $1.20. The lower sterling pushes up the price of imports, which is likely to affect the price of goods as producers and retailers pass on increased costs to consumers.

BDO Employment Index

The employment index has seen a slight increase from 100.9 in August to 101.2 in September. The increase shows that firms are continuing to hire at rates above that of the long term trend. However, the index has seen a steady decline from peaks in 2015, largely, BDO’s analysts stipulate, the result of changes within the wider economy. The triggering of Article 50, and wider uncertainties in the near term, the firm notes, may result in additional uncertainties.

Related: UK firms concerned about Brexit, but uncertainty is hindering action. 

* CBI Industrial Trends Survey, CBI Monthly Trends Enquiry, Bank of England Agents' summary of business conditions, and Markit/CIPS Manufacturing and Services PMI data.


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Project management industry adds £156 billion of value to UK economy

15 April 2019

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”