UK CEOs optimistic, prioritising AI, tech investments, survey shows
UK CEOs are displaying increased optimism about their short-term prospects and are placing a strong emphasis on artificial intelligence (AI) investments, as indicated by the latest EY CEO Pulse Survey. This survey, encompassing responses from 100 UK CEOs, reveals a significant shift towards technology-centric strategies.
The findings indicate that 61% of UK CEOs feel more optimistic about their company's profitability compared to the same period last year. Half of the survey respondents have identified technology investments, particularly in AI, as a top strategic priority for the next 12 months. This is closely followed by enhancing data management and cybersecurity, with 49% naming it as a key focus.
Silvia Rindone, UK & Ireland Managing Partner for Strategy and Transactions at EY, commented on the implications of these priorities. She noted that the immediate agenda for UK CEOs is heavily geared towards leveraging existing technologies to drive growth and productivity. This, however, may be at the expense of long-term sustainability goals, which are being consigned to a lower priority.
Despite the emphasis on technology, sustainability remains a significant, albeit long-term, concern for most UK CEOs. Over half of the respondents, 56%, indicated that sustainability has become more critical to their agenda compared to 12 months ago. Nevertheless, 47% of CEOs admit they struggle to make a compelling business case for sustainability investments, primarily due to difficulties in clearly outlining the financial benefits. Additionally, 71% of CEOs agreed that activist shareholders are more focused on meeting quarterly earnings targets than on achieving long-term sustainability metrics.
Nevertheless, the respondents overwhelmingly believe that technology and AI have the potential to address sustainability challenges. A notable 70% agreed that these technologies could provide solutions to many of society's key sustainability issues.
A critical aspect of the survey highlights the prominence of strategic transactions for UK CEOs. An overwhelming 98% of respondents indicated that they plan to actively pursue strategic transactions within the next 12 months. This includes considerations for divestments, initial public offerings (IPOs), spin-offs, joint ventures, and mergers and acquisitions (M&A). Specifically, 79% are considering divestments, IPOs, or spin-offs, 42% are looking to form joint ventures or strategic alliances, and 33% are contemplating M&A activities.
When exploring the reasons behind these strategic transactions, 42% of CEOs cited the desire to access new geographies, 39% aimed to secure supply chains, and 36% sought to acquire technology, new production capabilities, or innovative start-ups. Rindone remarked on this trend, stating that UK CEOs want to engage in strategic transactions to fulfil immediate priorities. She emphasised boards' need to balance these short-term gains with a focus on core operations and pursuing opportunities to invest capital in their remaining portfolios.
While UK CEOs are optimistic and largely focused on technology and AI investments to enhance growth and productivity, they still recognise the importance of sustainability. However, making a robust business case for sustainability continues to be a challenge. Strategic transactions are set to play a vital role in their near-term strategies as they explore various avenues to bolster their operations and long-term objectives.
