The majority of chief executives around the world are preparing for a downturn, but most expect it to be short-lived and are growing more confident about the longer-term outlook for the global economy.
Of the 1,300 bosses who took part in KPMG’s annual CEO Outlook, eight out of ten are anticipating a recession, and seven out of ten say it will knock up to a tenth off their profits.
The economic outlook, which includes rising interest rates and inflation, is now the top concern for chief executives in the UK. Uncertainty about Covid is second. Political uncertainty and regulatory risks are also concerns.
Three quarters have already taken steps to weather the storm: 39 per cent have stopped recruiting and almost half expect that they will have fewer staff in six months. Fewer than one in ten, however, think that they will have fewer staff in three years.
Many executives are also reducing their environmental, social and governance ambitions. Half said that they would either pause or reconsider their efforts within six months.
There has been a wave of profit warnings from businesses across all sectors in recent months, driven mostly by surging prices of everything from fuel to food and companies that are reliant on a spendthrift consumer have been hurt by the public’s falling confidence.
Despite those concerns KPMG found that three quarters of chief executives were confident about the resilience of the economy over the coming six months. That is “markedly more” than the 60 per cent who said the same in February, shortly before Russia invaded Ukraine.
Executives are more optimistic about the outlook further down the line as well. Just over two thirds of leaders said they were confident about global growth over the next three years, compared with six out of ten earlier in the year. Bill Thomas, global chairman and chief executive of KPMG, said: “Once-in-a-generation issues — a global pandemic, geopolitical tensions, inflationary pressures and financial difficulties — have come in short succession and taken a toll on the optimism of global chief executives.”
He added, however, that it was encouraging to see that bosses’ confidence in their longer-term growth prospects remains. “The events of recent years have created real turbulence for the business community.
“Our findings should provide some cautious optimism that, in contending with and overcoming these ordeals, executives are more confident in their companies’ resilience and are focused on mitigating some of the very real uncertainties we face today,” he said.
British bosses say the future will be bright – just not quite yet…