Business leaders across the U.K. are far less optimistic about the economy than they were a year ago, according to our 2023 Business Leaders Outlook survey. Less than half (46%) have a positive outlook about the global economy today; last year, nearly two-thirds (66%) were optimistic.
Optimism around the national economy has fallen as well—to 44% from 58% last year. Notably, 69% of business leaders in the U.K. said they expect a recession in 2023. That’s higher than their counterparts in the United States (65%), India (61%), Germany (59%), France (53%) and Australia (46%).
But there are some bright spots. Nearly nine in 10 (89%) business leaders expect their revenues to increase or remain the same in 2023. A similar percentage (88%) said they will increase or maintain capital spending. And nearly three-fourths of companies expect to add or keep employees; a similar amount (73%) say they’re optimistic about their company’s performance.
Economic outlook and expectations
Less than half of U.K. business leaders are optimistic about the global, national and regional economies. But their pessimism doesn’t carry over to how they feel about their own industries and companies.
Economic outlook for 2023
Global economy: Optimistic 46%; Neutral 17%; Pessimistic 37%
National economy: Optimistic 44%; Neutral 18%; Pessimistic 37%
Local economy: Optimistic 43%; Neutral 25%; Pessimistic 33%
Industry performance: Optimistic 62%; Neutral 22%; Pessimistic 16%
Company performance: Optimistic 73%; Neutral 16%; Pessimistic 11%
Optimism on the decline
The drop in optimism has been steep. A year ago, nearly two-thirds of business leaders were optimistic about the global economy. Today, less than half have a positive outlook.
Global economy optimism
2022: 66%
2023: 46%
Bullish on their own businesses
The vast majority of businesses (89%) expect their revenues to grow or hold steady in 2023. A similar amount (88%) expect their capital expenditures to increase or remain the same.
Business expectations
Revenue/sales: Increase 69%; Remain the same 20%; Decrease 11%
Profits: Increase 62%; Remain the same 23%; Decrease 15%
Capital expenditures: Increase 62%; Remain the same 26%; Decrease 12%
Capital needs: Increase 68%; Remain the same 23%; Decrease 9%
Election effects
Leaders generally don’t expect many changes due to recent elections. The one outlier? Inflation, with roughly half thinking it will get worse.
Sentiment following the 2022 elections
Climate change concerns: Worse 27%; Same 46%, Better 27%
Inflation: Worse 46%; Same 30%, Better 24%
Regulatory environment Worse 16%; Same 51%, Better 33%
Trade policy: Worse 21%; Same 50%, Better 29%
Corporate taxes: Worse 34%; Same 40%, Better 25%
Infrastructure: Worse 15%; Same 58%, Better 27%
Government favorability toward businesses: Worse 21%; Same 42%, Better 38%
Business challenges
U.K. business leaders face multiple challenges today. Among them: persistent inflation, high energy prices, snarled supply chains and a shortage of workers.
Top ways companies are adapting to inflation*
Raising prices: 48%
Watching change in relative prices: 38%
Making changes to purchasing: 37%
Prioritising most profitable products: 37%
Automating processes: 36%
Strategic stockpiling & changing pricing model (tie): 32%
*Among respondents who indicated they are experiencing inflation.
What’s driving up the cost of doing business*
Energy prices: 70%
Supply chain: 62%
Raw materials: 56%
*Among respondents who indicated they are experiencing inflation.
Top responses to the labour shortage*
Offer flexible hours: 53%
Offer upskilling/training: 47%
Provide flexible work location: 46%
Increase wages and/or benefits: 45%
Invest in automation: 42%
*Among respondents who indicated they are planning to increase staff or maintain their current headcount.
Top external business threats
Energy prices: 25%
General market volatility: 15%
Cost of debt/access to capital: 13%
Russia-Ukraine War: 12%
Competition: 11%
Cybersecurity and fraud: 10%
77% are considering investing in renewable sources of energy as a result of rising energy prices*.
*Among respondents who listed energy prices as their top external threat.
Cyberattacks experienced in last 6 months
Malware (including ransomware): 33%
Data breach: 33%
Security of data/integrity concerns: 33%
Crashing of company’s online service or site: 32%
Business email compromise: 26%
Payments fraud: 26%
Social responsibility
Top areas of focus within corporate responsibility: Environmental 56%; Social 56%; Diversity, equity and inclusion 49%
Top objectives motivating corporate responsibility*
Improve employee retention: 52%
Establish/reinforce company’s position in community: 51%
Enhance marketing and find new customers: 49%
*Among respondents who indicated they plan to focus on an area of corporate responsibility in 2023.
Business transitions and growth plans
Plans for business transfer
Yes, full transfer: 22%
Yes, partial transfer: 31%
Timeline to transfer business*
Within the next two years: 74%
Two or more years from now: 26%
*Among respondents who indicated they have a full or partial business transfer plan in place.
Growth strategies for the next 12 months
Expand into new distribution channels: 43%
Expand into new domestic markets: 41%
Expand into new international markets: 41%
Focus on most profitable products: 41%
Introduce new products/services: 40%
About the survey
In its second year, the J.P. Morgan Business Leaders Outlook: U.K. survey is a snapshot capturing the concerns and expectations of senior business leaders whose companies have annual revenues between £20 million and £2 billion.
This year, 306 respondents completed the online survey between 21 November and 8 December, 2022. Results are within statistical parameters for validity; the error rate is plus or minus 5.6% at the 95% confidence interval.
Who took the survey
CFO: 38%
Other C-level: 24%
CEO/chairman/chairwoman: 19%
Owner/founder: 14%
Other: 2%
Company size by number of employees
1-49: 2%
50-99: 2%
100-249: 13%
250-499: 20%
500-999: 28%
1,000-4,999: 26%
5,000+: 9%
Company size by annual revenue
£20mm- £100mm: 48%
£101mm- £499mm: 22%
£500mm- £1b: 17%
£1b- £2b: 12%
Company by industry
Government: 2%; healthcare: 7%; higher education: 3%; home services: 8%; industrials: 2%; manufacturing: 18%; media/entertainment/advertising: 2%; oil and gas: 3%; other professional/non-finance: 3%; real estate: 2%; restaurants/food services: 2%; technology: 20%; transportation/logistics 5%; wholesale/retail: 17%; other: 7%
Note: Some numbers may not equal 100% due to rounding.
Contributors
Vis Raghavan
Chief Executive Officer EMEA J.P. Morgan
Charlie Jacobs
Co-Head of Investment Banking, U.K. J.P. Morgan
Richard Sheppard
Co-Head of Investment Banking, U.K. J.P. Morgan
Catherine Pierre
Head of Commercial Banking, U.K. J.P. Morgan
Jack Counterman
Head of Treasury Services, U.K. J.P. Morgan
Pierre Maman
Vice Chairman, Head of Debt Financing, EMEA, Commercial Banking J.P. Morgan
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.
