UK CEO's confidence remains shaky, however there is ground for optimism with a recruitment boost planned for 2010

This rising confidence appears to have been translated into a boost in employment with 42 per cent of UK business leaders planning to increase their headcount in the next 12 months. This response, combined with recent ONS unemployment figures showing a slight improvement, suggests the UK job market outlook is more positive than it has been for sometime.

UK business leaders are proving more upbeat than their European counterparts when it comes to recruitment. In the Netherlands, only 34 per cent of CEOs expect to increase headcount, followed by France (30 per cent), Italy (29 per cent), Germany (27 per cent) and Spain (9 per cent) but while the UK is leading the European pack, further afield Brazil (61 per cent), India (59 per cent) and China (53 per cent) are showing an even quicker return to bolstering their workforces.

Despite the positive outlook for employment, three quarters of UK CEOs expect consumers will spend less and save more and, as a consequence, 63 per cent plan to make some change to their business and a further 13 per cent plan to make a significant change as they manage the impact of shifting consumer behaviour.

Since last year, a more positive outlook has emerged for the mergers and acquisitions market with 14 per cent of business leaders compared with 7 per cent in 2009 now saying it is a route to growing their business, although this is someway behind pre-recession levels.

Business growth looks set to remain home grown as only 14 per cent of UK CEOs in 2010 see new geographic markets as an opportunity to grow their business, compared with 22 per cent in 2009 and 28 per cent in 2008.

Ian Powell, UK Chairman and Senior Partner, commented:

“It is encouraging to see that UK CEOs are beginning, if somewhat cautiously, to prepare for an upturn. Growth expectations have been severely impacted by the challenges of the financial and economic crisis and the fears of a protracted recession are beginning to recede.

“However, there remain significant variances in UK business leaders’ short-term and long-term outlooks, perhaps as a result of concerns about how UK public debt levels are reduced. Across the world outlook is even more divided geographically with emerging economies showing much stronger signs of confidence than CEOs in the developed territories.

“The upturn in employment prospects will be widely welcomed but this news must be tempered given that the bounce back may be a response to employment cuts made in the UK over the last 12 months.”

“The fact CEOs are less likely to seek out new geographic markets is a significant concern, given the risk it places on UK competitiveness. Seeking out business growth opportunities from overseas is vital to future recovery,” Ian Powell warns.

Key report findings:

• A quarter of UK CEOs are very confident about revenue growth in the next 12 months – an increase of 10 per cent on the previous year. This compares with 91 per cent of CEOs who are more confident about prospects over the net 3 years.
• This year 46 per cent of UK CEOs are very confident compared to 29% in 2009. 91% are very/somewhat confident compared to 88% in 2009.
• 63 per cent of UK business leaders believe recovery in the economy will occur in 2010.
• While 50 per cent of UK CEOs believe recovery in their industry will occur in 2010, 26 per cent do not expect to see their sector recover until 2011.
• Better penetration of existing markets is seen as the main opportunity for business growth in the next 12 months.
• The top three threats in the UK are exchange rate volatility, over-regulation and macroeconomic imbalances.
• 59 per cent of UK CEOs think that compliance and reporting to meet capital market requirements will become more difficult. Access to capital from alternative investors and through equity markets are less of a worry.
• 74 per cent of UK CEOS in the UK are planning to implement a cost reduction initiative in the coming 12 months.
• 42 per cent of UK CEOs are planning to increase headcount, 30 per cent of UK CEOs will keep headcount the same, 28 per cent of UK CEOs will reduce headcount.

To download a copy of our new CEO survey please follow the link http://www.pwc.com/gx/en/ceo-survey/index.jhtml