Business optimism has declined sharply in the UK, and businesses’ expectations of revenue growth in the next year are lower than in 2019.
The drop – which is broadly in line with Europe – is led mainly by businesses in the North West, one of the regions hardest hit by COVID-19-related restrictions.
However, seven in ten UK businesses expect to have returned to pre-COVID levels of profitability by the end of 2022 and a fifth by the end of this year.
The resurgence of COVID-19 is the primary concern for growth and recovery. More positively, it’s also the biggest driver of sales growth. Unlike the global picture, but in line with Europe, defensive cost-cutting will be the predominant strategy of UK businesses when dealing with either scenario.
of businesses expect to return to pre-COVID growth levels by the end of 2022
Impact of COVID-19
Growth in domestic demand
Introduction of new products & services
|Already ahead of our pre COVID levels %||End of 2020 to 2022 %||2023 to 2025 %|
|More pessimistic %||More optimistic or expect to stay the same %|
|North America 2019||12||88|
|North America 2020||26||73|
|South America 2019||13||86|
|South America 2020||18||80|
|Rest of Africa 2019||18||82|
|Rest of Africa 2020||32||67|
*Excludes businesses answering 'Don't know'
In line with globally, the events of 2020 have not dampened the inclination of most UK businesses to invest to grow. Slightly more than three in five intend to increase investment in the next year.
More than half identify employee wellbeing (55%) and the customer experience (53%) as investment priorities in 2021, above the global average. Increasing cash flow/capital management, cyber security and data protection are the next highest priorities. This suggests UK businesses are taking a well-balanced approach by investing across important parts of their business. To enable this, they intend to invest in technologies that help customer targeting/experience and improve speed to market.
Invest in the customer experience
Invest in the workforce / employee wellbeing
Make changes to supply chain to make it more resilient
Improve the quality of their products / services
of UK businesses intend to increase investment in their business in the next year, despite the challenging environment