Gloom grows in UK boardrooms as bosses lament ‘hostile’ economy

Pessimism is deepening in boardrooms across the UK as bosses prepare for economic conditions at home and globally to worsen, a new report suggests. 

Around 70 per cent of boardroom leaders expect worldwide economic conditions to worsen in the year ahead, while just 5.4 per cent believe they will improve, according to a survey by The Chartered Governance Institute UK & Ireland.

By contrast, only 22.2 per cent in 2024 anticipated a deterioration in global economic conditions, and exactly double that percentage forecast them getting better.

Nearly two-thirds of respondents also think the UK’s economic circumstances will weaken further, compared to just a quarter asked the same question last year.

CGI said executives are concerned UK competitiveness would not improve in the months ahead, due to factors like US trade tariffs and UK Government policy.

President Donald Trump has slapped a 10 per cent baseline tariff on most US imports, as well as a 25 per cent import tax on car parts and a 50 per cent levy on foreign steel and aluminium. 

The tariffs have heightened anxieties about economic growth slowing, both in the UK and internationally, and inflationary pressures for consumers and businesses magnifying.

Meanwhile, the proportion of boardroom leaders who said their firms plan on cutting capital expenditure over the next year rose to over a quarter, while none are forecasting a ‘considerable’ increase.

‘The results remind us that boardroom decision-making has rarely been more challenging,’ said the report.

‘Organisations of every type are operating in a fluid, and often, hostile environment that (this year particularly) offers few certainties and elevated risk,’ it added.

The biggest concern for most boards is cybersecurity, with 71 per cent of governance professionals predicting cyber risks will grow this year.

However, a smaller proportion of boards – 66 per cent – intend to raise spending on IT security, against 80 per cent in 2024/25.

Among significant worry is regulation; most quoted governance professionals believe rules are ‘slightly excessive’.

Peter Swabey, policy and research director at CGI UK & Ireland, said: ‘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.

‘The Government’s industrial strategy will need to address these concerns if it is to unlock long-term investment.’

Having originally set to be announced this spring, Britain’s industrial strategy is now set to be published in the last week of June.

Defence, digital infrastructure, clean energy and advanced manufacturing comprised the top four priorities for the industrial strategy among the CGI survey’s interviewees.

The strategy is also set to include details on the creative, financial services, life sciences, and professional and business services sectors.

CGI’s survey was based on the full responses of 96 participants from organisations either based in or operating in the UK.

Governance professionals in private businesses and members of quoted firms each comprised 35 per cent of the responses. The remaining 30 per cent were from representatives of the public sector, charities and other ownership structures.