Rising interest rates and uncertain economic conditions continue troubling local business leaders
U.K. business leaders are meeting optimism with caution as four-in-ten (42%) are preparing for a possible recession or believe we are already in one, which is down 25% from 2023, according to J.P. Morgan’s third annual U.K. Business Leaders Outlook survey.
“The breadth of use businesses have for AI speaks to the ways in which they’re looking to innovate and adapt to be better prepared to do business in today’s world.”
In a survey of nearly 300 C-suite executives from U.K. businesses, optimism around company (82%) and industry performance (75%) has increased over the past year, and as a possible result, decision-makers are expecting revenue and sales to increase in the year ahead (78%).
“It’s been another tricky year for the local business community as interest rate hikes and an inflationary environment has left U.K. businesses feeling the pressure,” said Catherine Pierre, Head of Commercial Banking U.K., J.P. Morgan. “As we head into 2024, despite a possible recession, business leaders are gearing up to react accordingly—while also forging ahead with plans for thoughtful growth.”
However, despite their confidence, less than half remain optimistic for the global economy (48%) and national economy (43%) as persistent challenges continue to create hurdles for business leaders. Rising interest rates (40%) and uncertain economic conditions (38%) are among the top challenges for U.K. business leaders, with more than three quarters of respondents citing inflation is increasing the cost of doing business (79%).
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Pressing on, Aiming for Expansion
Even with ongoing economic pressures, the U.K. business community is focused on growth. In the year ahead, business leaders plan to grow their businesses by:
- Introducing new products and services (51%)
- Prioritising their most profitable products (46%)
- Looking to strategic partnerships or investments (41%)
- Expanding into new international geographical markets (39%)
- Expanding into new distribution channels (39%)
Additionally, four in ten U.K. business leaders say they expect to increase their headcount (40%) in 2024, while about the same amount (41%) plan to maintain their current headcount.
Finding Paths Toward Growth Through Financing
To help counteract the effects felt from an uncertain economy, 58% of U.K. respondents expect their credit needs to increase in the year ahead, while down 10% from 2023, only 5% expect their credit needs to decrease.
- The most utilised type of financing currently is bank lines of credit (52%), though just over a quarter (27%) plan to use this in the year ahead.
Adoption of Artificial Intelligence
While 21% of U.K. respondents say the adoption of artificial intelligence (AI) is one of the most significant challenges facing their business, the majority (79%) report they are already using or are considering using AI tools, such as generative AI and language processing software, in the year ahead.
“The mounting interest in AI from businesses continues and, on the back of the Government’s AI summit late last year, it’s something that policy makers are expected to keep a close eye on too,” said Pierre. “The breadth of use businesses have for AI speaks to the ways in which they’re looking to innovate and adapt to be better prepared to do business in today’s world.”
Survey Methodology
J. P. Morgan’s U.K. Business Leaders Outlook survey was conducted online from November 16 – December 13, 2023. In total, 279 business leaders (CEOs, CFOs, heads of finance and owners) from U.K. midsize companies (annual revenues generally ranging from £20 million to £2 billion) across various industries participated in the survey. Results are within statistical parameters for validity, and the error rate is +/- 5.6% with a 95% confidence level.
