Our Autumn 2017 Risk and Confidence survey has revealed that the confidence of British businesses’ has been knocked by a combination of the shock UK election result in June, and ongoing uncertainty over Brexit. 47% of business leaders state that Brexit has had a negative impact on their business and 31% claim the General Election result made them less confident in their ability to grow.
To compound this only 28% of UK multinational business leaders from our survey said they were confident they could grow and prosper in the coming months – a dramatic drop from the Spring 2017 report, in which 71% of business leaders cited confidence in growth. Despite the grim picture this paints, topline growth still remains a priority, with a slight jump to 51% of business leaders prioritising topline sales or expanding market share.
With the UK economy being perceived as uncertain, business leaders appear to be looking for growth opportunities abroad. Currently 63% of businesses believe Europe is the market with the strongest growth potential. Looking ahead to spring next year our Risk and Confidence survey revealed Europe’s popularity slightly declines though it remains top choice. Asia also rises from third place to second, overtaking North America and almost doubling from 8% to 13%.
The UK also seems to be declining as a market with growth opportunities with our survey revealing a decrease from 10% to 7% with a lack of clarity around Brexit and access to the single market still unsure both the UK and Europe may continue to decline as markets offering potential topline growth to Multinationals.
Whilst it is exciting to see UK multinationals still eager to grow and explore new markets, it is concerning that despite these growth plans the Risk and Confidence survey showed only 6% are concerned about supply chain risk and only 8% are concerned about corporate risk. Along with global expansion comes more regulations and more complex supply chains, and these greater exposures must not be underestimated by boardrooms.
What is heartening about this research, despite it suggesting a diminishing level of confidence in the domestic UK economy, is that business leaders appear bullish about continuing to deliver topline growth. Long may this continue, but we hope a greater understanding of the risks involved will future-proof businesses and allow for even greater growth.
When expanding into new territories, businesses must be aware of the following:
- Regulation: Whilst new markets can lead to growth they also lead to more regulations to contend with. Businesses must be aware of the regulation, jurisdiction and the exposures that may arise from operating within them.
- Regional differences: As well as regulatory differences businesses will also be exposed to political, economic and sociological differences, and should be prepared with the knowledge of how to operate and do business within the regions they choose to do business in.
- Look at the macro as well as the minutiae: As well as examining the operational details of expanding into new markets businesses must also take a wider view and examine how people interact and how business is conducted to gain the most benefits of expanding wider onto the global stage.
Patrick Peters, Senior Underwriter for International Solutions
These findings come from our Risk and Confidence Survey, for more insights download your copy here www.cnahardy.com/pulse.