ECI - Latest growth index.

Sep 30, 2019

We are closely connected with ECI, one of the UK’s leading growth-focused private equity firms, and Managing Partner Sean Whelan has kindly allowed us to share a link to their latest growth index: https://www.ecipartners.com/news-and-insights/growth-surveys/2019

This index is published every ten years, giving us a perspective on the past decade for fast growing UK businesses.

The index teaches us a lot about how the future of UK business was viewed shortly after the 2008 crisis, and that this can perhaps help us moderate today’s pessimistic outlook on the future of the UK’s economy, and potentially temper the risks of a Hard-Brexit:

Despite talks of a “lost decade” since the 2008 financial crisis, ECI found that many UK growth companies outperformed expectations despite the limited access to finance triggered by the subprime crisis. This shortage of funding was counterbalanced by various government reforms which led to a shared sense of optimism amongst surveyed companies that it would be easier to borrow in the short-term, which is likely to trigger growth.

The report also tells us about current employer concerns:

While 74% of respondents fear political uncertainty in the short term (next 5 years), a mere 25% name this as a concern in the long term (5-10 years). More seem to fear an economic downturn in the long term (29%). Thus, there is a strong need for politicians to offer the business world clarity on political matters that affect business, and most particularly Brexit. Many companies need to prioritise their selection of expansion markets, which is delicate with such uncertainty.

Another current concern underlined by the index is the skills shortage in the UK, due to the rise of AI and reduction in immigration. The latter concern is very much on the mind of employers and is ever increasing (32% in 2016 and 62% in 2019). The uncertainty surrounding Brexit is preventing many companies from concentrating their efforts on either training local workers or recruiting skilled foreign workers.

The growth index also gives us some key indications on the technologies and markets that are likely to play an increasing role in the future:

Artificial intelligence truly sticks out as the key element for business in the coming years: 55% of the respondents are looking to invest in AI/Machine Learning. The technology is predicted to lead to the disappearance of 7 million jobs – yet the creation of 7.2 million new ones. Therefore, many workers will need to acquire new skills to thrive in an AI dominated market; while companies need to find or train workers with that particular skill set.

As mentioned earlier, many UK companies are looking to expand their services abroad. 48% of respondents are looking to expand in the East Asian area, the remaining 52% still view Europe and North America as their main targets for expansion. This contradicts the world economy’s current eastward shift as China and other markets gear up to rival North America and Europe.

With these key insights into burgeoning UK businesses, ECI’s index is a goldmine for anyone wanting to know more about the current and future state of our economy.

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