Importance Score: 75 / 100 🔴
UK Boardrooms Brace for Economic Downturn: Pessimism Deepens
A new study reveals a deepening sense of pessimism within UK boardrooms, as executives brace for a potential deterioration in global and domestic economic waters. The study highlights that boardroom leaders are concerned about the future of economic conditions and are preparing for a downturn, impacting global markets and business investments.
Gloomy Outlook on Global Economy
The Chartered Governance Institute UK & Ireland’s survey indicates that approximately 70% of boardroom leaders anticipate that worldwide economic conditions will decline over the coming year. A mere 5.4% foresee any improvement.
- Worsening Conditions: 70% expect a decline.
- Improvement Expected: Only 5.4% anticipate positive change.
This sharply contrasts with 2024 figures, where just 22.2% predicted a slide in global economic conditions, while twice that number expected advancements.
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UK Economic Concerns
Almost two-thirds of those surveyed also believe that the UK’s economic circumstances will weaken, a stark increase from the quarter who expressed the same concern the previous year. Executives are increasingly worried that issues such as US trade tariffs and UK government policies may hinder the UK’s ability to compete effectively on a global scale.
Impact of Trade Tariffs
President Donald Trump’s imposition of a 10% baseline tariff on most US imports, along with levies like the 25% import tax on automotive components and the 50% tariff on foreign steel and aluminium, plays a vital role in this perspective.
These tariffs are considered to have amplified fears that economic growth, both nationally and internationally, could slow down. They also elevate inflationary pressures affecting both individual consumers and varied business types.
Capital Expenditure Cuts
Furthermore, the percentage of boardroom leaders reporting plans to decrease their firms’ capital expenditure within the subsequent year has risen to over a quarter. Not a single respondent projects a ‘considerable’ increase in this area.
Boardroom Challenges
The study emphasizes the unprecedented challenges in boardroom decision-making as “Organizations of every type are operating in a fluid, and often, hostile environment that (this year particularly) offers few certainties and elevated risk”.
Cybersecurity Concerns Remain High
Cybersecurity looms large as the paramount concern for most boards. A substantial 71% of governance professionals forecast that cyber risks are set to intensify this year.
- Cyber Risks: Predicted to grow by 71% of governance professionals.
- Cybersecurity Spending: 66% plan to increase, down from 80% in 2024/25.
However, fewer boards—66%—are planning to augment their investment in IT security, a decrease from 80% in 2024/25.
Regulatory Burden
Significant anxiety revolves around regulatory matters, with a majority of governance experts suggesting that current regulations are perceived as ‘slightly excessive’.
Expert Insights
Peter Swabey, policy and research director at CGI UK & Ireland, noted that “Governance professionals, always in tune with board sentiments, reveal a boardroom mood of caution and recalibration… While AI and cyber resilience are climbing the agenda, confidence in the UK’s economic outlook and regulatory environment remains fragile.”
He added, “The Government’s industrial strategy will need to address these concerns if it is to unlock long-term investment.”
Industrial Strategy Delayed
Originally slated for announcement this spring, Britain’s industrial strategy is now anticipated for publication in the final week of June, outlining objectives and priorities.
Defense, digital infrastructure, clean energy, and advanced manufacturing constitute the foremost priorities for this industrial strategy, reflecting sentiment shared among the CGI survey participants. Sectors such as creative industries, financial services, life sciences, as well as professional and business services are also set to be extensively detailed.
Survey Demographics
CGI’s survey encompassed complete responses from 96 participants derived from organizations either headquartered or operating within the UK.
Governance professionals employed within private enterprises and members affiliated with quoted firms each represented 35% of the survey’s respondents, while the remaining 30% consisted of representatives from the public sector, charities, and diverse ownership structures.