Key survey findings at a glance:
- Confidence in global growth is significantly lower for business leaders in the UK. 56% of business leaders believe that global growth will decline in 2021, while 29% are not confident in their own organisation’s ability to grow revenue.
- Brand strength a weakness of UK leaders and an area they are considering strengthening in the next 12 months
- Digital capabilities considered a weakness, but interestingly innovation is not
2020 dispensed unique hardships for business leaders worldwide. For those in the United Kingdom, pandemic-related pressure was compounded by concerns over Brexit and negatively affected the overall economic outlook. While some industries thrived, others, such as hospitality, leisure, and travel, suffered massive setbacks.
UK business leaders navigated the challenging landscape by prioritising digital transformation, assessing vulnerabilities, and preparing to mitigate threats for upcoming environmental-based emergencies. To evaluate the pandemic’s effects on UK business leaders, we gleaned insights from our global HLB Survey of Business Leaders. The study looked at how executives responded to questions about the economy, digital technologies, talent acquisition, and trade relations. Moreover, we reviewed the overall recovery outlook by evaluating planned actions to reduce risks from climate change and supply chain concerns. Initially, our results found that UK business leaders were more pessimistic about global growth prospects. Fortunately, falling COVID-19 rates and the ongoing vaccine rollout over the last six weeks of the survey increased positive feelings about economic growth.
Confidence in the economy rises, but growth is slow
In 2020, only 21% of UK business leaders believed the rate of global economic growth was likely to increase over the next 12 months, compared with 23% of global peers. Furthermore, 29% of surveyed UK leaders say they are not confident in their company’s ability to increase revenue over the next 12 months, versus 24% of global executives. The confidence gap may be partially from a lack of trust in political leaders relating to Brexit and the initial pandemic response. Like global leaders, 87% of UK executives view economic uncertainty as a barrier to growth, while 91% worry about the impacts of COVID-19. Yet, UK leaders are less concerned about threats from protectionism, disruptive technologies, and social instability than their peers globally. Recent improvements suggest that trust is slowly returning, resulting in improved economic outlooks. With nearly 21 million vaccinated in the UK and manufacturers adjusting to post-Brexit changes, an increase in stability may boost optimism.
UK variances by sector
Recent data from the Centre for Retail Research (CRR) and published by the British Press Association shows the restaurant industry lost 29,684 jobs in 2020, and redundancies increased by 163%. With new variations of COVID-19 on the rise, the hospitality sector continues to face vast challenges. As we progress in 2021, the travel industry also continues to experience ongoing issues. New restrictions imposed on 5 January 2021 and the suspension of travel corridors on 18 January 2021 cut into profits. The hotel quarantine programme which began on 15 February 2021, may, however, bolster some hospitality revenues. With the Prime Minister’s February announcement that hospitality venues cannot seat guests indoors until at least 17 May, leaders in these UK sectors are rightly concerned. Yet, the ban on evicting commercial tenants may be extended an additional three months instead of ending at the end of March, which could help struggling UK business owners keep their storefronts. Unfortunately, the Coronavirus Business Interruption Loan Scheme ends in March, leading to full business rates going forward. Although data from the Office for National Statistics (ONS) shows declines for many sectors in 2020, certain segments did well. Online retailers, household goods stores, digital publishers and broadcasters, supermarkets, and online education and training services were well-positioned to weather the storm. Other bright spots include 3.3% growth in the manufacturing sector and a 4.6% rise in construction output during the fourth quarter of 2020.
Optimistic forecasts for business revenue growth
Even with many respondents expressing concern over economic and revenue growth, the overwhelming majority feel confident or very confident that their business can increase revenue in 2021. This positivity is likely due to the increased vaccination rate, adjustments to business post-Brexit, and hopefulness for relaxed restrictions in the second quarter. Moreover, goals to improve vulnerable business areas also may improve outlooks. Despite this, less than half of UK business leaders believe the rate of global economic growth will stay the same or increase.
UK business leaders prioritise improvements
To prepare for future disruption, UK leaders identified key weaknesses to focus on over the next 12 months. The top three priorities include enhancing operational effectiveness, digital capabilities, and brand strength. Talent acquisition, cost management, and supply chain vulnerabilities also rate highly. For small and medium enterprises (SMEs), brand strength impacts market share. A higher number of SME survey respondents may be the reason why 9% more UK business leaders list brand strength as a weakness than their global peers. Since talent acquisition also affects brand strength, improvements to this area can support overall brand importance. Survey responses also differed on forming new partnerships. 16% of global leaders identified new alliances as a weakness they planned to focus on over the next 12 months versus only 7% of UK leaders. To overcome existing deficiencies, 64% of UK leaders plan to improve their operational efficiency. Plus, 61% aim to build organic growth, while 43% expect to launch new products or services.Click here to learn more.