Less than half of UK businesses optimistic about future growth
A perfect storm of Brexit anxiety, rapid demographic shifts and a stagnant economy mean that fewer than half of the UK’s private businesses are optimistic about future growth, according to a new report. While three quarters of UK private businesses identified Brexit as the biggest issue facing their business, talent shortages are also estimated to cost UK private businesses an estimated £29 billion annually.
With the Brexit process having stalled until the end of October, confidence in the UK economy sits at a low point. Recent studies of both large and small businesses have found that British capital is facing a turbulent 12 months. With many firms still waiting to see the outcome of Brexit, a large number of jobs could soon exit the country.
A new study from Big Four firm PwC has shown that optimism amongst UK private businesses has fallen at more than twice the rate of their European counterparts. PwC’s European Private Business Survey polled over 2,400 private and entrepreneurial businesses across 31 European countries and found that growth expectations amongst 220 UK firms surveyed had slumped to 49% from 69% in 2018.
91% of respondents were positive about their growth over the last three years; however, the uncertain future the UK economy faces has clearly stifled that bullishness going forward. While less than half were positive about their prospects in the coming 12 months, 85% agreed that digitalisation is key if businesses are to be viable in the long-term, a figure higher than the European average of 65%. This is possibly due to the fact 36% stated they face revenue losses/unrealised revenues as a result of skills shortage. In the UK, PwC estimates the absence of appropriate skills is costing firms £29 billion annually in lost revenues – around 1.4% of UK GDP.
Growth expectations amongst companies in the other 31 European countries had fallen over the same period by only 8% (from 65% in 2018 to 57% in 2019). The survey posits a growing European-wide skills shortage represents a big challenge for private businesses.
Commenting on the findings, Suzi Woolfson, PwC’s UK Private Business leader commented, “Private businesses in the UK along with countries across Europe are cautious about their growth prospects, echoing the sentiment we are seeing globally. Brexit continues to remain a concern, and, until there is some certainty around it, businesses will continue to tread carefully. Yet uncertainty also brings opportunity and those companies that are agile and flexible can benefit enormously from uncertainty.”
Woolfson added that the role of technology is key for private businesses to remain ahead. "Leaders recognise the importance of technology to their long term aspirations, which is why it is important to invest in technology and data to ensure real commercial improvements in systems and processes. The right investments can lead to substantial benefits."
