LONDON – New global survey data from Grant Thornton’s International Business Report (IBR) reveal that firms around the world are entering the new year on a significantly optimistic footing, with optimism at net 58% – a new global record in Grant Thornton’s quarterly survey, which has been running for 25 years. Further signs of positivity in the global business mood come in the shape of selling prices, which a net 36% of firms feel confident enough to increase over the next 12 months – the highest in nearly three years. Profitability expectations have increased in step, with net 50% of firms globally expecting higher profits in 2018 compared to 2017.
These figures contrast significantly with the survey’s UK findings, which saw optimism steadily drop in the months leading up to and following the UK’s referendum on EU membership. Figures for this quarter (Q4 2017) show net 12% optimism, a slight (3pp) rise from the previous quarter, but 14pp drop from the same period last year and 61pp drop from two years ago (Q4 2015).
Encouragingly, UK firms are showing a growing appetite for increasing their exports, with net 24% of businesses expecting to do so over the coming 12 months. This compares with just 15% in the same period last year, and has steadily increased over the past 4 quarters.
Robert Hannah, chief operating officer at Grant Thornton UK LLP, commented: “UK businesses have effectively been kept in a holding pattern since the vote to leave the European Union in June 2016, with very few details over Brexit negotiations causing significant uncertainty since. However, the past few weeks have given businesses a degree of clarity over the process and we should see this start to be reflected in optimism figures over the coming months. The ‘breakthrough’ deal agreed in Brussels, along with earlier details on the Government’s Industrial Strategy and corporate governance reforms have all given businesses a lot to consider over the holiday period.
“To help further allay UK businesses concerns, the Government’s focus should now be on agreeing a Brexit transition period which would provide certainty in the short term and remove the possibility of a ‘cliff-edge’ Brexit in March 2019. If this is not agreed by the end of Q1 2018, we could expect to see more firms implementing their ‘no deal’ contingency plans.
“In the meanwhile, it’s encouraging to see British businesses increasingly focusing on their export strategies and attempting to maximise opportunities in markets abroad. Whist many dynamic businesses are still finding growth opportunities in the domestic economy, those businesses that are actively establishing relationships in international markets stand to benefit the most in the mid-longer term.”