UK firms are failing to innovate as they are focused on survival amid a bleak economic outlook and recession fears, a survey has suggested.
Half of company bosses said the threat of economic volatility has caused them to stop innovating, according to a poll of more than 300 chief executives and top bosses across the country by consultancy Magnetic.
Some 56% of firms are prioritising the survival of their business above all else.
Business leaders are choosing to “batten down the hatches” in the tougher economic environment rather than invest in future growth, Magnetic said.
It comes as firms have grappled with rising prices, weaker consumer demand, higher borrowing costs and a bleak growth outlook for the economy, with ongoing concerns Britain could dip into a recession.
Nevertheless, more than a third of senior leaders said growth and innovation is a top priority for them over the next six months, suggesting there is appetite to invest in their business in the new year.
The survey, which included two thirds of firms with more than 250 employees and an annual turnover of more than £1 million, found that most were turning to technology as part of plans to innovate.
Nearly nine in 10 of the business leaders said they were planning to update their technology, as artificial intelligence (AI) comes into sharper focus for the UK economy.
Furthermore, 27% said they wanted to prioritise upgrading cyber security over the next six months, and 26% were planning to focus on investing in IT infrastructure.
Earlier this week, the Government pledged to spend £500 million over the next two years to fund innovation centres to make the UK an “AI powerhouse”, as it hopes to be a world leader in technology.
Chancellor Jeremy Hunt said he wants to make sure researchers and start-ups can access the compute power they need.
Mr Hunt also confirmed that a tax break allowing firms to cut their bills if they invest in new equipment will be made permanent, which he said will boost business investment.
Jenny Burns, chief executive of Magnetic, said it is important that firms “do more than just survive”, despite a difficult economic backdrop.
She said: “The volatile economic landscape combined with geopolitical tensions and a dramatically evolving consumer outlook has hurtled business leaders in the UK from challenge to challenge; the pace and enormity of change is unfathomable.
“The solution here is not to batten down the hatches.
“The best leaders are investing in their teams to help them become more flexible to uncertain change, demonstrate enthusiasm for growth and learning, and feel emboldened to think creatively beyond the status quo.”
Published: by Radio NewsHub
