Most chief executives are more confident about the longer-term outlook for the global economy and are preparing for a downturn, but most expect it to be short-lived.
Eight out of ten of the 1,300 bosses in KPMG's annual CEO outlook predict a recession, and seven out of ten say it will knock up to a tenth off their profits.
Chief executives in the UK are concerned about the economic outlook, which includes rising interest rates and inflation. There is a lack of certainty about Covid. Political uncertainty and regulatory risks are also concerns.
Three quarters have already taken steps to deal with the storm: 39 per cent have stopped recruiting and almost half expect to have fewer staff in six months. Fewer than one in ten think they will have fewer staff in three years.
Many executives are reducing their environmental, social and governance ambitions. Half said that they would pause or reconsider their efforts within six months.
In the last few months a wave of profit warnings have been issued by businesses across all sectors, driven by surging prices of everything from fuel to food and companies that are reliant on a spendthrift consumer.
Three quarters of chief executives were confident in the resilience of the economy over the next six months, despite concerns by KPMG. That is more than the 60 per cent who said the same in February, shortly before Russia invaded Ukraine.
Executives are more optimistic about the outlook further down the line as well. In the next three years, just over two thirds of leaders said they were confident about global growth over the next three years, compared to six out of ten earlier in the year. Bill Thomas, global chairman and chief executive of KPMG, said once-in-a-generation issues — a global pandemic, geopolitical tensions, inflationary pressures and financial difficulties — have taken a toll on the optimism of global chief executives. He added that it was encouraging to see that bosses' confidence in their long-term growth prospects remains. The events of the last few years have created turbulence for the business community.
He said that our findings should provide some cautious optimism that executives are more confident in their resilience in the face of the ordeals and that they are focused on dealing with some of the real uncertainties we face today.