The government is on a charm offensive in Davos, but businesses are sceptical
UK business confidence is set to decline compared to 2024, with more than half of all UK executives expecting business risks to increase in the year ahead, says Heather Blundell
Chancellor Rachel Reeves has attended the World Economic Forum’s annual meeting in Davos this week with a clear mission – to convince global CEOs and wealthy investors and financiers gathered in the Swiss town that Britain is not only open for business but is where the smart money lies.
It may not be an easy sell. The UK economy has been sluggish with a burdensome regulatory environment blamed for stifling growth.
Nevertheless, Ms Reeves and Jonathan Reynolds will seek to hammer home the message that UK Plc is one of the most exciting places to invest, underpinned by entrepreneurial spirit, a skilled workforce and a stable and supportive government.
Back home, business leaders might greet the government’s charm offensive with scepticism.
In the wake of the Budget last October, firms face “pain” amid hikes to national insurance costs for employers.
Meanwhile, UK businesses – from startups to established corporations – will not be insulated from global instability arising from political upheaval, trade tensions and financial volatility. All of which can create uncertainty.
The risks of AI
Indeed, research published today – across all regions and business size – reveals that UK business confidence continues to decline compared to 2024, with more than half of all UK executives expecting business risks to increase in the year ahead.
CEOs and board members in key sectors such health, tech, retail, energy and finance warn of rising costs, stagnating economic growth and the potential impacts of regulatory changes. They also harbour concerns over cyberterrorism and artificial intelligence (AI).
Surveys suggest that more than two thirds of business leaders (65 per cent) are somewhat or very concerned about the potential risks AI poses to their organisation and its reputation, with 42 per cent of business leaders most concerned about data privacy breaches, followed by deep fake fraud (18 per cent) and bias in AI algorithms (17 per cent).
The government’s ten-year AI plan is to be applauded but these potential barriers to progress must be tackled head-on.
Of course, successful business leaders are agile and flexible, adept at identifying and seizing opportunity in times of uncertainty. Indeed, many iconic businesses – including Microsoft, Netflix, Pets at Home and Airbnb – were either forged or flourished during tough economic periods.
The government’s ten-year AI plan is to be applauded but these potential barriers to progress must be tackled head-on.
That government rhetoric does not always match reality should also not be a surprise. Regardless, the government has a responsibility to deliver and maintain economic stability – with a steady hand on the tiller and an iron grip on finances.
Business leaders also look to the government to reduce cumbersome regulation and barriers to growth.
Doing so will unshackle UK firms and afford them the freedom to do what they do best – create jobs, invest in talent, develop new innovations and attract investment.
This means that there must be clarity about the policy direction ahead.
Yet more than half of business leaders (56 per cent) are only ‘somewhat’ confident in their ability to adapt quickly to new government policy and legislation. This cannot be good for UK Plc and the trepidation must end.
The government faces economic challenges but the good news is that businesses the length and breadth of the country stand ready and able to drive Britain forward.
However, they cannot achieve this with excessive regulation and long-term uncertainty.
All in all, the fact that UK ministers are banging the drum for Brand Britain in Davos is encouraging. The same commitment is needed back home, to support and celebrate businesses, to restore confidence and self-belief. If we pull together, Britain’s future should be bright.
Heather Blundell is UK CEO of Grayling