UK CEOs on growth, resilience and AI

Linda Ellett: Welcome to The Insight in 15. I'm Linda Ellett and I'm joined today by Jon Holt, our Senior Partner and Group Chief Executive of KPMG in the UK and Switzerland. Thanks for joining us, Jon.

Jon Holt: Brilliant to be here.

Linda: KPMG's 2026 CEO Outlook has just been released. It's an annual survey of 1,400 CEOs across the globe, including 150 in the UK who run some of the biggest businesses in the country. The findings reveal their thoughts on growth, technology, talent and sustainability. And I'm hoping to get your thoughts on the results. I'd like to start with growth prospects. There's a mixed picture coming through from the CEO Outlook this year. While CEOs in the UK are 20% more confident in the prospects for their business. They're 20% less confident in the UK economy going forwards. Is that in line with what you're hearing from other CEOs?

Jon: Look, I think CEOs have had to deal with a very tricky position for a long time, and actually their balance sheets often are actually in quite a strong place. So I think they are quite confident in many areas about growth. The world is in a tricky place though, and I think it's not surprising that people are nervous about where it's going. There's a great deal of uncertainty. There's a lot of geopolitical events which are impacting on, directly on business, on things like the cost of living, energy prices, interest rates, inflation.

So all these things feed into people's confidence in the wider economy in the UK and across Europe and across the whole world. So in many ways, the most important thing is that business leaders are confident about their own business. So I take a lot of comfort in the fact that they are more optimistic about the future.

Linda: But the UK CEOs, they identified three threats to their business over the next three years. So we had global economic uncertainty, cybersecurity and regulatory pressures. I guess what would you say those three threats mean more specifically for CEOs at the moment?

Jon: Well, I think everybody is looking much longer term around the resilience of their businesses. And I think people have learned that. I mean, you know, this in your part of the world, in the days when people would have a supply chain, which was absolutely precise and they would take frankly, they would take risks in things being delivered because it was very efficient. And they worked out the maximum efficiency. That isn't the way people do things these days, because maximum efficiency probably means you're less resilient. And people have learnt the hard way through things, actually things like Covid as well as through geopolitical events.

So people are now thinking in a different way. People are thinking about supply chains, where they come from. Cyber, unfortunately, is something that every chief executive talks about and it's here to stay. And if you look at our own business, we're very, very busy in our cyber advisory business. I just think that is unfortunately the world we all live in now. And it's not going to change in the near term. So understandable. Regulation is an interesting one. And I think there's a push to try and reduce regulation.

But many businesses say there's a push, but it doesn't seem to come through into reality. It might come through in years to come, but I still think we could do a lot more to push through reducing red tape, supply side economics. So that's in many ways that's a free hit for the government. If they can reduce regulation and it doesn't cause harm or damage, then it's an easier thing to do than to increase taxes or to reduce spending in sensitive areas.

Linda: Absolutely. And to drive growth. And we're going to come back to that in a minute. But I just want to pick up, because you started that answer to talk about resilience. And I've got some stats for you from the survey on that, because actually 96% of UK CEOs say their resilience planning agenda has moved from short term to long term over the past year, which you touched on.

And I guess that's the kind of nature of the pressures that people are feeling. So things like global economic uncertainty, rapid AI development. Those aren't one shot things. They're going to kind of carry on. So I suppose I'm interested in what you're seeing from CEOs, what you're thinking about, about how you create a long-term successful business rather than just more immediate resilience protection.

Jon: Yeah it goes back to what I just said really, which is basically you can't maximise everything for absolute efficiency. You will come unstuck. Now you get into big geopolitical events like we're seeing at the moment, and you have to plan with optionality, and you have to plan with much more certainty around how you, your supply chain works around the partners that you choose, around governance and sovereignty. And all these factors are now much, much more front of mind for chief executives.

Linda: Let's talk a bit more specifically about AI. So there's obviously lots in the news. Tech leaders talking about AI development maybe should even be slowed down now. There should be more regulation. Who would have thought? But actually CEO Outlook is telling us that there's no let up. So 82% of CEOs said it's a top investment priority for them. From a KPMG perspective, I'm interested not so much in what we're doing, but the 'how' of how we think about using AI in our business.

Jon: Well, thoughtfully is how we do it because our whole business is based on trust. So we have to be very thoughtful about putting the human at the front of AI, which I think is very important. Governance, sovereignty, data protection, all these things we have to think about when we use and adopt AI in our business. Having said all of that, we are adopting AI in virtually every part of our business and it's hugely exciting. You know, it is, it should be the thing that unlocks significant productivity gain. It is the thing that should unlock capacity in parts of the economy where there is a lack of capacity, and it should make things faster and more accurate. So all those things are great. There are societal things that we need to work through in terms of the dislocation of certain jobs.

By the way, we've been through those cycles in the past. I'm more of an optimist than a pessimist than some people are on that. But I think it's the great thing right now. So it's not a great surprise that CEOs are spending a lot of money on it. I think if you went back two years, we deliberately gave people money to try things in a safe environment, out without great expectation of ROI, because we wanted to see how it worked. And we had some trials, and I think people are now through that. And so I think people now want real proper use cases. They want tangible outcomes. They're not so interested in people experimenting or trying. I think the experimentation, trying phase has sort of happened over the last 18 months, and we're moving into a much more tangible period.

I still think people often over exaggerate the returns they're going to get, but it's getting better and better. And we do see clients now with really good, tangible outcomes from AI. So you know that this thing is happening. I'm also of the view that you'll reach a tipping point. So it'll be hard. And then you'll reach a tipping point and you'll see massive benefits. Then it'll be interesting because you'll see companies coming out with quite bold statements about the productivity, capacity, efficiency, speed gains that you get through AI.

Linda: I want to pick up on the topic of skills, not just in the area of AI, although obviously it's a clear area. So both in the UK and global CEOs said that skills gaps across our organisations were the biggest workforce issue that they're facing. So do you find that coming up in your conversations with your fellow CEOs, and what kind of things do you hear?

Jon: I think we do probably need to skew the country a bit more towards things which are practical, you know, vocational things which are actually going to get people jobs because AI is going to take certain jobs, but they'll be replaced by other jobs. So we've got to think what those jobs are and then train people for them. So there is, there is a process of educating people about AI, but there's also a process about working out what are the jobs of the future and then making sure people are skilled to do it.

I think the whole devolution agenda, which you might come onto also, is relevant to this. Because if certain parts of the country are going to specialise in certain things, which I think to a degree they will, then you need to make sure the whole thing's joined up. And I find in a lot of conversations I have, perhaps particularly with CFOs asking about how do we recruit finance professionals, find myself talking about curiosity and understand that is quite a key thing we look for in our graduates and more generally. So we don't just look for absolute pure academia. If we did, we'd recruit everybody from, you know, in theory, a few very, very prestigious universities. That's not what we do, because actually what we want is a much more balanced individual.

We do want very clever people, but we do want people who are curious. We do want people who have got an interest in the business world. We do want people who are good, good 'people' people who can talk to people. So the skills, the skills are actually much broader and holistic, and it's that whole package that we look for and others do.

Linda: And in a fast changing world, those people need great leaders as well. So we asked in the CEO Outlook which leadership capabilities are most essential. And what came back was greater agility, stronger strategic foresight, digital literacy, and geopolitical and regulatory understanding. So a big list, perhaps not surprising, but you know, for you, what would you call out as like the most important thing for today and tomorrow's CEO in leading in such a fast changing world?

Jon: Well, that's a good list. I think agility, which was your first one, probably is the one. I think in the past you could set a strategy and sit back for three years and follow a strategy through. We could have done that ten years ago, probably. You can't do that now. You have to have a very dynamic strategy, which will change on a much more regular basis. So I think agility, I think agility is the one. And it's hard. People talk about agility but what does that actually mean?

Linda: You beat me to it, Jon. I was going to ask you.

Jon: Yeah, well, I never think I'm the cleverest person in the room, and I never think I'm always right. So I don't, you know, I'm not the cleverest person at KPMG. And I know that. Okay. So I am open to listening to ideas. In the end, you have to corral around an idea and go with it. And then you need strong leadership to take you in a certain direction. But what you can't be is very rigid as a leader and say, I'm right, this is the way forward. You know, that isn't really the leadership style today. I think you've got to be much more open to new ideas than perhaps you had to be in the past.

Linda: And I guess part of that, you've touched on it, is making good decisions and making them quickly. In a world of more and more data and ability to analyse that data, do you find data helpful because it can give you it can make you a better decision, or can it actually slow you down?

Jon: I think it's super important, and we use data all the time to make decisions. But then you need good data. And I think, I think this is one of the places where AI will dramatically improve things because like many businesses, we have structured data. Fine, we can access that very easily, but we also have unstructured data. And some of the tools now around organising unstructured data are fantastic, which didn't exist five years ago. So as a CEO, you need to be able to make sure you've got access to all of that data, not just the structured data. But yeah, it's super important. I mean, you can run a business purely on gut instinct, but unless you're a genius, which I'm not, then you probably won't be successful.

Linda: So Jon times almost up, and I do want to go back to where we started with growth and perhaps some of the thoughts around devolution and regions. You said you were optimistic. Got the Autumn Budget coming up this month, first under Andy Burnham. What would you like to see included in the Budget that's going to help drive UK growth?

Jon: Well, I think people want a long-term path on where we're heading on tax. So if you're a business and you're planning for ten years, you're investing in plant and machinery, in its simplest way of thinking about it, if the tax regime changes every two years, you won't invest. So it's pretty simple. You need some kind of roadmap of where we're heading and guarantees to allow you to be successful.

I think the second thing is, personally, I wouldn't want to see taxes which discourage entrepreneurship. I think we have a very good, business entrepreneur environment, but they are feeling a little bit under pressure, should we say, around some of the changes that have happened in recent years. I think also there are certain incentives which the government wants businesses to invest in. So I think we need a bit better clarity and access to some of those incentives. Sometimes people think those are sort of bad things to invest incentives. The whole point of the tax incentive is because the government wants you to invest in it. So clarity around some of those longer term incentives. And then look, I am pro devolution, pro devolution can't be anti London.

As somebody who lives half the time in London and half the time in the north of England, you know I'm pro London and I'm pro the north of England so I can recognise the benefits of devolution, having decision making closer to where actual decisions are, you know, where actual people live. And, and I think that is good. And we are very centralised in our country around tax raising, decision making. I think it's better to make decisions, you know, closer to where the action is. But we have to also make sure that those people have got the skills to be able to do it in an effective way. It can't just become another way of raising taxes.

Linda: I was with some retail CEOs yesterday, and the hope is for a really boring Budget, is the way it was described, as you say, to give some certainty. Jon, we always end the podcast with the same question. What's the one thing you'd like our listeners, the businesses that they work for, to take away with them today?

Jon: Well, go right back to where you started. Be optimistic. Okay. We need and if I had one plea, it would be don't talk down the UK, okay. One of the nice things about my job is I travel all around the world, and the UK has a tendency to talk down UK plc, and we have so many good things about this country. And some of the things that are said about our country are just simply not true. So I would encourage people to try and be as optimistic as you feel like you can be, and to tell people in other parts of the world that the UK actually is a fantastic place to do business, to live and, you know, to have your future.

Linda: Brilliant. What a fantastic way to end. So that's our 15 minutes up. Thanks for joining us today Jon. If you've enjoyed this episode, please do like and subscribe. You can find us on YouTube, Apple Podcasts and Spotify. We hope to see you again on The Insight in 15.