Resilience and agility of UK plc continues to attract investor interest

UK corporates have demonstrated remarkable resilience and agility in the face of global economic uncertainty over the last number of years. Successfully navigating several years of macro volatility has meant that management teams have significant experience developing effective strategies to endure periods of change. When these qualities, which are some of the greatest attributes of many UK management teams, are combined with a robust balance sheet, they provide a firm foundation for future success.

This was the overarching assessment at the Investec CEO Conference in London, where leaders from over 70 listed corporates from a wide range of sectors, some with a long history on the UK public markets as well as some newer faces, met with global institutional investors. UK-listed companies’ track record at handling periods of transition and successfully adapting to shifting market conditions, including short-term instability and long-term structural changes, is a testament to the breadth of expertise at the helm of UK plc.

Corporates with a competitive advantage, a track record of consistent earnings and a strong balance sheet can thrive in tougher climates, particularly when this is combined with an experienced, nimble management team. Attributes of a strong balance sheets often include a balanced capital structure, such as low debt ratios, as well as cash generative operations and income generating assets. Combine this with an agile leadership and it means a business can move quickly to capitalise on opportunities when the market is showing signs of recovery or starting to grow.

For example, the global pandemic meant businesses had to adjust quickly to operate in the new ‘normal’. Companies that were previously reliant on global supply chains increasingly looked at ways to diversify or de-risk those operations, including onshoring and localisation. This is an example of repositioning that has been a critical differentiator and illustrates that management teams who are open to evolving their business operations or understand there are sometimes requirement to pivot, build more resilient businesses. These same strategies can, in the event of an economic upturn, provide the launch pad to capitalise on a recovery.

What is also clear is that structuring a business for the long-term requires strategies that will facilitate growth and expansion, securing competitive positioning and at the same time building a balance sheet structure that can sustain operations in a downturn. And going forward. Despite some concerns around potential operational cost increases following the recent UK budget, investors and corporate leaders remain cautiously optimistic on the outlook for next year. The UK economy is on a firmer footing, the new Labour government has committed to investing £35 billion in infrastructure, £12 billion to accelerate the transition to clean energy and £20 billion to green transport over the next five years.

There is one caveat, the impending arrival of Donald Trump in the White House at the end of January, which might raise some issues but will more likely shine a light on UK corporate leaders’ agile management skills, the resilience of their operations and their ability to leverage their firm financial footing to drive long-term performance.

As we go into 2025, we are excited to continue working with our current and future clients to provide the most appropriate and innovative financial solutions to support their future business growth.