Increased positivity about the economy and Brexit, but not enough to prompt rise in Capex, Bellwether finds

London, 24 February 2020 – FTSE350 boards are displaying more confidence in the economy, with the results of a survey published today by The Chartered Governance Institute showing a twofold increase in the number of respondents believing that the global economic outlook will improve in the coming year and a fivefold increase in the number believing that the UK economy will improve. This is not yet enough to encourage greater capital investment, however, despite fears lessening over Brexit, with fewer companies now rating an exit as damaging and the overwhelming majority (81%) not currently considering relocating their head office or listing.

Commenting on the winter 2019 Boardroom Bellwether survey findings, Peter Swabey, Policy and Research Director at The Chartered Governance Institute says: “The thawing of relations between the US and China appears to be reflected in a more upbeat view of the global economy. The survey results also point to much greater optimism about the UK economy, with confidence at its highest level since 2015. Despite the uncertainty surrounding the forthcoming trade negotiations with the EU, 36% of respondents now expect an improvement, up from just 7% in summer 2019. We are also seeing fewer companies viewing Brexit as damaging to their business.

“The increased positivity is not yet enough to prompt a rise in capital expenditure, however, with fewer people (33%) expecting to increase their expenditure compared to six months ago (43%) and more people expecting to reduce their expenditure (18% compared to 13%). Nor do many companies have plans to increase job numbers in the UK over the next year. Just under a fifth (22%) have plans to increase numbers, while 24% have plans to decrease job numbers and 38% have no plans either way.”

The key findings of the biannual survey, which is run in association with the Financial Times and looks at the business environment and governance issues facing the FTSE 350, are as follows:

  • Global economy: The majority of respondents (38%) predict no change in global economic conditions, with 21% predicting an improvement and 29% predicting a decline. This compares to 23%, 10% and 51% respectively in summer 2019 when the majority of respondents expected a decline.
  • UK economy: 36% of respondents anticipate an improvement in the next twelve months (up from 7% six months ago and 2% in winter 2018) and 41% predict a decline (down from 69% six months ago and 81% a year ago). Predictions about the outlook for companies’ own industries have also rallied with 26% predicting an improvement (up from 14% six months ago and 15% a year ago) and 31% predicting a decline (43% in summer 2019 and 50% in winter 2018).
  • Brexit: Just under half of respondents (49%) view the impact of leaving the EU as damaging (down from 59% six months ago and 73% a year ago), with an additional 50% considering that an exit will bring no change and 1% viewing a departure as positive. Respondents’ views about the threat of a no-deal Brexit are mixed with 36% believing that it would be harmful, 26% believing that it would not and 38% unsure. Furthermore, just 29% of respondents are increasing inventory to prepare for a no-deal Brexit and 63% are not, both figures unchanged from six months ago. The number of companies considering moving, or already having moved, a substantial part of their business from the UK to somewhere in the EU has decreased in the last six months (from 12% to 7%). The number of companies not considering a move, but which have an EU subsidiary, has also fallen from 32% in summer 2019 to 25%. An additional 61% of respondents are not considering a move to the EU at all, up from 52% six months ago, and just 17% have considered relocating their head office or listing in the last year.

The key governance findings include:

  • Boardroom diversity: Gender diversity continues to grow, with 84% of respondents considering their boards to be gender diverse – the highest level yet. Just 3% consider that their board is not gender diverse, the lowest level since questions about gender diversity were first asked in 2015. Ethnic diversity remains a concern, however, with just 29% of respondents considering their boards to be diverse, up from 26% in summer 2019 but down from 32% in winter 2018.

    ‘The fact that the number of boards not considered to be ethnically diverse has barely moved from 53% in winter 2017 to 55% today shows that much more remains to be done if boards are to achieve the ‘Beyond One at 2021’ target set by Lord Parker. Pipeline management has an essential role to play in ensuring greater diversity at board level and this is as true for ethnic diversity as it is for all other types of diversity.’ (Peter Swabey)
  • Risk management: Global economic risks are now the top concern for British businesses, with 40% of respondents viewing these as the major reason for their exposure to risk increasing. Cyber risk, which was previously considered to be a major risk, was selected by just 11% of respondents.
  • Climate change: Almost all boards that responded to the survey have discussed issues relating to climate change at least once in the past year (96%), with nearly half returning to the subject several times. Just 11% have concluded it is a major risk, however this is almost double the 6% who viewed it as a major risk in summer 2019.
  • Employee engagement: The majority of respondents (40%) prefer the designated non-executive director option to get workforce voice into the boardroom. Just 3% favour having an employee on the board. 26% prefer a combination of the other options put forward by the FRC.
  • Executive pay: Consideration of the pay ratio between the chief executive and the average employee has increased substantially. Now 74% of remuneration committees take this into consideration and 26% do not, compared to 52% and 48% respectively a year ago. Consideration of the gender pay gap has also improved: 68% take it into consideration compared to 56% a year ago.
  • Pay gap reporting: The number of companies that have made changes to policies and strategies as a result of reporting on the issue has increased from 9% in winter 2017 to 31%, the highest number yet seen.

“When questioned about which one regulation respondents would most like to see the Government bring in or reform, the overriding sentiment was a general halt of the increasing tide of regulation. It is clear that companies would like red tape to be removed and for regulation to be simpler. There were also calls for a total reform of corporate reporting and clarity on the UK’s future trading relationships,” concludes Peter Swabey.

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Notes to Editors:

  1. The Chartered Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance. Website: 
  2. The Financial Times is one of the world’s leading business news organisations, recognised internationally for its authority, integrity and accuracy. The FT has a record paying readership of more than one million, three-quarters of which are digital subscriptions. It is part of Nikkei Inc., which provides a broad range of information, news and services for the global business community.
  3. The full report, which is based upon the responses of 72 FTSE 350 companies, is available to download at 

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