| | Half of global businesses
expect a recovery next
year, according to
research by KPMG
International. And taken
collectively, over eight
out of 10 respondents
predicted recovery by
2011 – 11% said recovery
would come in 2009, 51%
said 2010 and 22%
predicted 2011.
UK businesses were
more pessimistic than the
global sample as a whole,
predicting recovery in
2011, later than European
peers such as Germany,
Italy and Spain, who all
forecast 2010.
For half of the
businesses surveyed, the
economic downturn is
prompting a change in
strategy, with changing
customer buying habits
and cashflow pressures
cited as the main reasons
for this. Businesses in
the Asia Pacific region
said they were more
likely to adopt radical
new strategies in
response to the downturn
than those in Europe and
the UK.
In what KPMG believes
to be one of the most
comprehensive surveys to
date of global
businesses’ views on the
recession, 852 senior
decision makers were | |
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| | interviewed, representing
companies from 29
countries with revenues
ranging from US$250m, to
over US$ 5bn.
Sue Bonney, head of
tax at KPMG Europe,
commented: “Our research
reveals the truly seismic
scale of the impact of
the current global
recession on businesses
around the world.
Although commentators,
encouraged by a
stockmarket rally, are
detecting ‘green shoots’,
UK business does not
expect a recovery until
2011. This is in line
with the pessimistic
assessment published by
the Bank of England
recently and the earlier
findings of the IMF that
financial crises lead to
long drawn out
recessions. What’s clear
from our survey though is
that many companies are
facing a radical overhaul
of their corporate
strategy to reflect the
rapidly changing world.”
Key findings
Half expect
recovery in 2010 but UK
is more pessimistic,
expecting it in 2011
Globally, 11% of
respondents expected
recovery to come in 2009,
51% expected to see it in | |
| |
| | in Hungary and 42% in the
UK. The highest
proportion in Europe was
Ireland where 63%
expected radical change.
Bonney commented: “The
question clearly arising
from these results is why
are European businesses
so much less likely to
plan radical changes than
their peers in the
Asia-Pacific region. It
may be that European
enterprises are more
mature, more entrenched
and may perceive change
to be too difficult.
“Indeed for some
businesses such as
manufacturers with
complex, bespoke plant,
radical change may well
be a major challenge. The
results do, however,
suggest that it could be
the Asia-Pacific
businesses that make a
virtue out of necessity
and adapt to survive in
the post-recession world.
European enterprises run
a risk of being left
behind.”
Cost control
measures planned in all
global businesses, but
especially among UK
companies
Understandably in the
current climate, cost
control was a priority in
the short term. More UK | |
|
| | respondents had plans for
specific cost control
measures than the global
sample as a whole, with
almost twice as many UK
companies planning to
reduce headcounts than
their global peers.
Of UK respondents, 88%
said they planned to
reduce procurement and
supply chain costs
against 67% globally; 84%
planned to optimise
business processes (by
automation for example)
against 64% globally; and
74% of UK respondents had
headcount reductions
planned against just 41%
globally.
Bonney concluded:
“Whilst the UK shares the
global view that recovery
is in sight in the medium
term, our results suggest
that British businesses
are more pessimistic than
their global peers and
that more are braced for
more pain to come in the
form of cost control
measures to get through
the downturn. Whilst
short to medium term
survival is clearly of
critical importance,
adapting to the changing
commercial world is also
crucial and UK businesses
will need to consider
their longer-term
strategies for the
post-recession | |
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