Landmark BCG Report Shows UK Businesses Optimistic Despite Pressures

LONDON – 27 February 2023 –Boston Consulting Group’s (BCG) Centre for Growth published its inaugural business survey ‘State of UK Business 2023: Squeezed but still standing’ today. The report is a broad and comprehensive survey of over 1,500 UK business leaders from firms of all sizes covering the breadth of the economy.

The past few years have been some of the most difficult for businesses in the UK and with 75% of business leaders expecting a recession this year, 2023 looks set to be another challenging one. Despite this, the findings from State of UK Business 2023 show reasons for optimism and challenge the prevailing economic narrative in several places:

• Business leaders are much more optimistic about the medium term. 61% expect economic growth to be somewhat or significantly better in 2025, challenging the view that the UK is slipping into a medium-term malaise. 
• This optimism extends to their own firms with 63% of leaders thinking their business’s revenues will grow over the next three years.
• While the OBR and BoE forecast unemployment to rise sharply this year, the survey found that over three quarters (77%) of senior leaders expect their headcount to stay the same or grow over the next twelve months, well exceeding those who expect it to reduce (20%).
• Inflation may prove more persistent than expected. 56% of business leaders say they will continue to increase prices over the next six months, a finding which holds across all sectors and businesses of all sizes.
• The UK Business Resilience Index, constructed by the Centre for Growth, assesses UK business’ resilience and highlights that there are concrete actions – such as supply chain diversity and flexible working practices – which can boost resilience and are positively correlated with both historic and future expectations of revenue growth.
• Contrary to many headlines, there is also a lot of positivity towards new ways of working. Only 8% of business leaders said that the move to remote working has had a negative impact on staff performance. Nearly a third (29%) of business leaders said they had hired purely remote workers in response to labour shortages too.
• Business leaders are prepared to pursue sustainability priorities even though they know it will be costly. 63% of leaders say that an economic downturn will either increase their company’s prioritisation of environmental sustainability or have no impact. This is despite 60% saying it will increase their costs over the next five years.
• There is no clear consensus amongst business leaders on which specific policy changes would positively impact their firms. This highlights the challenge in making policy to support businesses across the economy in the current environment. The policies that ranked highest with business leaders were focused on boosting businesses margins, such as tax reductions and simplifications, but no one policy change achieved support from more than a third of business leaders.  

Raoul Ruparel, Director of BCG’s Centre for Growth, commented: “It is easy to get downbeat about the UK’s prospects both in the short and medium term but those running our businesses tend to be more optimistic. Business leaders are anticipating a short-lived downturn with the labour market likely to remain stronger than expected. It’s also encouraging to see that an economic downturn will have little to no impact on business leaders’ prioritisation of environmental sustainability and net zero. UK businesses are undoubtedly feeling squeezed, but they’re still standing and, in many cases, looking optimistically to the future.”

You can read the full report here.

ABOUT THE CENTRE FOR GROWTH

BCG’s Centre for Growth focuses on accelerating sustainable and inclusive economic growth in the UK by working with businesses, government and wider society to deliver breakthrough outcomes.

As part of BCG, the Centre for Growth brings together ideas, people, and action to drive the UK forward. We work with our global expert network to identify transformational opportunities, connect key decision-makers and build coalitions for change. We offer long-term strategic insight, extensive cross-sector expertise, platforms for dialogue, and bias to action.

We believe that the UK has genuine sources of competitive advantage. Collaboration can achieve breakthrough change. Opportunities for disruption can energise the UK economy.