Senior business figures optimistic about business prospects for 2016

• Nearly all agree the government’s policies will improve the British economy
• Most (92%) agree that the UK is an attractive place to invest, but US seen as the best country for doing business
• But three-quarters (76%) fear Chinese economy slowdown poses a threat British economy

The majority of leaders of the UK’s biggest companies are optimistic about prospects for their company in 2016 according to a new Ipsos study.

The findings come from “Captains of Industry”, an annual survey of more than 100 of the most senior figures in top UK companies, and show 57% of respondents predict business will improve in 2016. Only 7% think that things will get worse.

Optimism about their own companies’ prospects reflects Captains’ positivity about the economy generally. Nearly all Captains agree (96%) the government’s policies will improve the state of the British economy, an increase from 86% a year ago, signifying a firm vote of confidence in the new Conservative majority government.

Most (92%) agree that the UK is an attractive place to invest, with only 3% disagreeing. This positive outlook has strengthened over the last three years with 42% now strongly agreeing compared to just 19% in 2013. That said the USA is currently seen as the best country for doing business by 45%, with the UK in second place (33%), followed by Singapore (8%) and Canada (6%). The USA is also the leading choice as the most attractive country for investment (39%), well ahead of the UK (19%), India (11%) or China (8%).

When asked to weigh up whether a range of factors have a positive or negative effect on their company, a majority (61%) agree that the current government’s attitude to UK businesses is having a positive effect. Captains are also more likely to agree the current low oil prices are having a positive effect than disagree (55% agree, 23% disagree).

Other factors provoke a more divided response. Some 27% of Captains are positive about the effect of a likely interest rate rise in the next 12 months compared to 32% negative. Similarly 21% think the planned introduction of the National Living Wage will have a positive effect whilst 20% see a negative effect. Opinions are overall more positive about the effect of the introduction of auto-enrollment pension schemes for all employees than negative (26% compared to 16%). However, the strength of the pound was more likely to be a concern (32%) than viewed as having a positive effect (25%).

Despite the generally positive outlook for the year ahead, business leaders report a number of concerns, either for the country as a whole, for businesses generally, or for their own company.

• Concern about the UK’s role in Europe has risen steeply over the past three years and for 61% is now considered to be the most important issue facing Britain today, up from 44% at the end of 2014.
• Immigration is mentioned by 21% as being amongst one of the biggest issues facing the country, a significant increase on previous years. Additionally, for the first time in recent years, terrorism is mentioned by 15%, as is uncertainty in the Middle East and China, along with skills shortages, poor political leadership and the world economy.
• When asked specifically about what are the most important issues facing companies, the leading problems are finding and retaining the right staff (17%), regulation (11%), the challenge of making the business grow (10%), skills shortages (9%) and digital transformation (8%).
• For the first time in the last three years, respondents mention China as one of the biggest issues facing businesses (8%). Three-quarters (76%) agree that a slowdown in the Chinese economy over the next 12 months is a significant risk to the British economy. (Although significantly fewer (44%) agree a slowdown in the Chinese economy is a significant risk to their own company, with 36% disagreeing.)
• Seven in ten (69%) feel that the level of regulation affecting business in the UK overall has been increasing over the last 12 months. The majority of Captains (77%) see over regulation as harmful to the UK economy, albeit only 23% strongly agree that regulation levels are harming the UK economy compared with 35% in 2012 and 2013.

Technical note

Respondents are executive board-level directors and chairmen. Companies are from the top 500 industrials by turnover and the top 100 financial companies by capital employed. A total of 102 respondents took part with interviews conducted from September to December 2015. 97 interviews were conducted face-to-face and 5 by telephone.