UK businesses are feeling increasingly confident about the British economy - so much so that they are planning to only focus on their domestic market as a means of achieving growth.
In a KPMG survey of 1200 chief executives of businesses across 10 countries, international trade was placed significantly down the list of priorities of UK bosses, as confidence in the UK economy continues to grow.
Whilst 47% of global CEOs are looking to invest significant capital into geographic expansion outside of their home countries, fewer than a fifth (19%) of chief executives in the UK were looking at making an investment outside their domestic market. In fact, making capital investments outside of their home countries was the 3rd most popular strategic priority for global CEOs, but was ranked just 8th for CEOs in the UK.
The United States was listed as one of the top two markets that all 1200 CEOs saw as having the greatest potential for new market growth over the next 3 years, however the 120 British CEOs surveyed ranked Western Europe as their overall top destination for new market growth, whilst global CEOs preferred the potential offered by China.
Commenting on the findings Kevin Smith, Chairman for KPMG’s London Region said :
“As the UK economy is among the fastest growing in the developed world it is unsurprising that UK CEOs are more bullish than their global counterparts. At home the prospects for UK businesses are probably among the best in the world. British GDP remains roughly in level with that of the US while outperforming the rest of Europe so it is easy to see why British CEOs would choose to focus on a healthy home market – with the advantage of being a home player rather than pursue higher growth in international markets where there are greater risks of potential market instability.
“British CEOs are often criticised for being slow to exploit opportunities in the BRICs, which account for around a quarter of global output but less than a tenth of UK exports. With growth slowing in these emerging economies but picking up in the Eurozone it’s easy to see why UK CEOs are keeping an closer eye on their own back yard.
“However, should situations in China and Brazil turn the corner in the next 12-24 months, UK businesses will find themselves on the back foot if they then decide that they want a piece of the huge opportunities on offer. With the issue of the referendum of UK’s membership in the EU on the horizon, it does seem short sighted for our UK corporates to not be investing in global territories outside of our traditional trading zones of Europe.”
The report, “Revolution or Evolution”, found that over half of UK CEOs (58%) say that global economic growth is a leading issue impacting their companies today but see little change in the proportion of income that will come from overseas countries.
Expanding existing facilities was cited as the leading capital spend for both global and UK CEOs with both groups looking to largely organic growth in order to move their businesses forward.