UK businesses are overwhelmingly confident in their post-Brexit performance
UK business leaders are optimistic about the economy and their company’s performance for the year ahead, even as they face the ongoing impacts of the pandemic and Brexit, according to J.P. Morgan’s inaugural UK Business Leaders Outlook survey released today.
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“In addition to the challenges brought by the pandemic, 2022 will more clearly present the real-world outcomes of Brexit for many businesses across the country”
In a survey of more than 275 senior executives from UK midsize companies, the business community is feeling confident entering 2022. About three out of five (61%) are optimistic about the European economy—that optimism steadily increases to 66% for the global economy, and the wide majority (81%) are more bullish on the future of their company’s performance. Additionally, three-quarters (74%) of executives surveyed are either moderately or greatly confident that their business will thrive in the year ahead. UK businesses are feeling upbeat because they’ve been able to bounce back, with 77% reporting that their profits have returned to or exceeded pre-pandemic levels.
In the post-Brexit era, decision-makers are feeling hopeful as the local government implements the full post-Brexit customs regime, which came into effect at the start of the year. While few businesses said they were unaffected by Brexit, 63% reported that leaving the European Union (EU) either immensely or largely impacted their business. Nearly half (46%) cite supply chain disruption as the biggest impact of Brexit on UK businesses. Despite this, most business leaders (81%) are optimistic about the long-term future of the UK economy outside the EU.
“In addition to the challenges brought by the pandemic, 2022 will more clearly present the real-world outcomes of Brexit for many businesses across the country,” said Catherine Pierre, Head of Corporate Client Banking, J.P. Morgan UK. “While it’s clear that businesses still need time to fully readjust to the new environment, it’s encouraging that so many business leaders are expecting growth and strong performances close to home in their own companies and industries.”
Responding to Supply Chain Disruptions
Midsize companies in the UK made several adjustments to overcome issues triggered by supply chain disruptions over the past few years. The top five tactics included:
- Adding suppliers from new geographies (45%)
- Strategic stockpiling (45%)
- Increasing prices for goods and services (43%)
- Replacing or stopping doing business with certain suppliers (37%)
- Allocating more capital to cover increased costs related to moving products (35%)
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Primed for Growth Despite Cybersecurity & Labour Challenges
A majority (88%) of executives believe their companies will grow over the next 12 months—for example, three-quarters of respondents expect to see their revenues (77%) and profits (72%) increase.
Resiliency over the past couple of years has helped UK business leaders address obstacles and pivot their business models in a number of ways, including:
- Going Digital: Nearly 9 in 10 expect business growth in 2022 driven by embracing innovation in a variety of ways, like through using digital channels (56%) and automating manual processes with new technology (51%).
- Committing to Cybersecurity: With the increased reliance on digital channels, there is greater concern around cybersecurity threats as 87% of business leaders are concerned about some type of cyber threat. Nearly all (98%) of these companies are taking action, with employee training being the most common method (38%) to prepare for and combat attacks.
- Retaining Top Talent: One-third of business leaders reported issues with workforce retention (39%) as a result of Brexit. To combat labour shortages and keep employees happy, nearly 70% of business leaders have adopted new practices to help manage stress in the workplace, like offering flexibility when and where employees work.
Proactive Succession Planning
The steady stream of disruptions at the personal, societal, political and business levels have contributed to a large number of businesses planning transfers in ownership.
More than two-thirds of UK business leaders are planning to transfer their businesses fully (32%) or partially (36%). Half of the survey respondents expect the transition to occur in the next two years, while 43% report that they’d transfer the business within the next 2-5 years. For leaders expecting to transition their business, 61% plan to keep the business in the family by moving the business to a family member through inheritance (28%), a sale (17%) or as a gift (16%).
Elevating What Success Looks Like
Corporations are being held to a higher standard globally. The study revealed that 83% of UK business leaders understand that being environmentally and socially accountable is an area of increased importance.
In fact, nearly half (45%) of business leaders have a positive outlook about environmental, social and governance efforts as they say they are already meeting the local requirements, while 37% are worried about not meeting the local requirements. Diversity, equity and inclusion and environmental factors (i.e., reducing carbon emissions, waste management, etc.) are the most important corporate responsibility factors among UK business leaders.
“Business leaders have learned a number of lessons throughout the pandemic, including that their businesses or brands can and should work to make a positive impact for their employees, customers and communities they serve,” said Vis Raghavan, Chief Executive Officer EMEA, J.P. Morgan. “Having an optimistic business outlook is about more than the bottom line, but also knowing the positive influence a company can make by focusing on its corporate responsibility.”
