UK businesses are optimistic about their ability to push through 2023’s economic challenges and achieve medium-term growth, according to research.
Three quarters (75%) of UK business leaders said they expect a recession in 2023, yet six in 10 (61%) expected economic growth to be better in 2025.
A further 63% thought their business would grow over the next three years, according to the State of UK Business 2023 report by Boston Consulting Group (BCG).
Understanding the UK economy:
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Over three quarters (77%) of senior leaders expected their headcount to stay stable or increase in the next year, compared with 20% who expected to cut payroll.
Raul Ruparel, director for Growth at BCG, told HR magazine that leaders’ optimism was justified.
He said: “We constructed an index so we could assess UK businesses’ resilience. We found the majority of businesses have a medium level of resilience, meaning they were relatively well placed to deal with recent economic shocks and a potential slowdown later this year.”
When leaders’ perception of their business’ resilience was compared to the index, Ruparel said: “On the whole, leaders were pretty good at assessing the state of their business, but there are some that overestimate their resilience. There may therefore be some elements of over-optimism within leaders given we do have a looming downturn.”
So far in 2023, the UK has experienced large-scale redundancies across the tech sector and 14,874 jobs have been cut from retail since the start of the year.
However Lauren Thomas, economist for employer review site Glassdoor, said the talent market remains so tight that hiring freezes are much more likely than more redundancies.
Speaking to HR magazine, she said: “Businesses are much more likely to cut back on hiring rather than reduce headcount through redundancies, and there’s still a lot of room for job vacancies to fall. Mass unemployment remains unlikely.
“Of course, some sectors are much more vulnerable to reduced headcount than others. Industries that have thrived during the era of low interest rates, like finance and tech, are an example.”
Ultimately, she added, the labour market seems set to remain relatively tight in the next few years.
Thomas said: “Labour force participation remains below its pre-pandemic norm, and with the ageing population, that looks unlikely to significantly turn around anytime soon.”