UK Edition
UK rises to become third most important country for company growth prospects, PwC says
The UK has risen a place in investors’ eyes to equal Germany as the third most important country for company growth prospects in a sign that Brexit has not weighed on the country’s international business standing.
Investors involved in technology and financial industries in particular gave a high ranking to the UK, which was surpassed only by the USA and China, according to analysis from PwC.
One in three investors included the UK in their top three, up from 19pc last year; Germany was also mentioned by a third of investors, down from 39pc in 2016. India was deemed to be the fifth most important country for corporate growth.
The professional services giant gathered interviews and data from more than 550 global investors and 1,300 CEOs.
It also found that London is perceived as the second most important city for growth prospects over the next year, behind New York. It was the only European city to enter the top five, which was rounded out by Beijing, Shanghai and San Francisco.
But investors’ views of a place’s “importance” is not necessarily a sign of confidence or optimism, PwC pointed out.
“Importance could be interpreted in a positive light – that the countries selected would be those expected to grow most or fastest. On that basis, the Brexit vote and all the uncertainty surrounding the UK’s future relationship with the EU appear not to be deterring investors,” said Hilary Eastman, head of global investor engagement at PwC.
“However, some investment professionals we spoke to saw that ‘importance’ could also be interpreted in a negative sense – that problems and greater volatility in the UK, for example, could have an important effect on slowing down companies’ growth.”
A recent survey by PwC found, though, that 89pc of UK chief executives said they were confident about the business outlook over the next 12 months. This is the largest share since 2013, marking a recovery from a dip to just 85pc in 2016.
Only bosses in Canada were more upbeat, with the UK’s top managers more confident than those from the US, Germany and Japan, also beating the global average of 85pc.
Today’s report into the importance of various countries for company growth prospects found that the surprising results of the EU referendum and the US election have calmed investors following than the preceding uncertainty. Though less than half, or 45pc, of investors and analysts said they were very confident about global economic growth, this was twice as many as last year’s 22pc.
Geopolitical uncertainty is perceived by investment professionals as the top threat to company growth prospects, PwC found. Other concerns include protectionism, the future of the eurozone, social instability and cyber threats.
“Investment professionals around the world are upbeat about global economic growth prospects, despite recognising the shifting political landscape in which companies operate,” Ms Eastman added.
Chief executives were more worried about uncertain economic growth, over regulation and the skills shortage than geopolitical uncertainty, and also included exchange rate volatility and the speed of technological change among their top concerns.
One in five respondents said they think that technology will completely reshape competition within five years, while 85pc said they expect automation to reduce company headcount.