Davos: Weaker outlook
UK bosses looking to hire despite growing global gloom
Businesses say the impact of President Trump’s tax cuts is fading
Markets traded lower overnight on the back of a downgrade from the International Monetary Fund on global growth and a survey showing growing pessimism among business chiefs.
The International Monetary Fund (IMF) has changed its outlook for global growth in 2019 from 3.7% to 3.5%. The annual survey of chief executives conducted by the consultancy firm PwC to mark the start of the World Economic Forum in Davos showed a sharp rise from 5% to 30% in the number expecting global growth to slow during 2019.
The pessimistic mood contrasted with bullish sentiments at the start of last year when global growth was strong and stock markets were soaring.
Since then the world economy has been impacted by US-China tensions, the fading benefits of President Trump’s tax cuts and a slowdown in China.
Even so, Britain’s CEOs shrugged off Brexit uncertainty, with 61% of UK business leaders saying they expected to increase headcount in 2019, up from 54% last year and compared with 53% of CEOs globally.
UK CEOs are also optimistic about their organisation’s growth over next 12 months, with 82% confident about their revenue prospects, in line with global responses.
However, this is down on last year, when 88% expected to see revenue growth within the year. There has been a similar dip in confidence about revenue prospects for the next three years (a fall of 6% from 96% in 2018 to 90% in 2019 in the UK).
Kevin Ellis, chairman and senior partner of PwC, said: “Uncertainty is at the forefront of UK CEOs minds, but they know regardless of market conditions, there are always opportunities for growth.
“By investing in talent, technology and developing new business models, companies can adapt and innovate to thrive. CEO confidence on hiring is a very positive sign.”
Some commentators say the survey may be painting too dark a picture of global prospects and that since it was conducted there have been signs of a breakthrough in US-China talks.
Asian markets dipped on the findings of the IMF and PwC. Hong Kong’s Hang Seng index was down 0.4% and Australia’s main share index slipped 0.5%. Japan’s Nikkei which had opened firmer, was flat.
The FTSE 100 closed just 0.03% higher at 6970.59.