London - 8 July 2020:

As lockdown eases in many parts of the world, business leaders are focused on reengineering their businesses through investments in R&D and technology. Uncertainty remains the biggest challenge they face, according to the latest figures from Grant Thornton’s research into the global mid-market* which also revealed plummeting optimism and expectations for trading conditions.

The research, which biannually gathers responses from 10,000 business leaders in 29 economies, including the G20, found that despite falling investment in other areas, 78% of firms intend to maintain or increase their levels of investment in technology and R&D (69%). This is despite over 65% of mid-market firms expecting COVID-19 to have a negative impact on revenues. On average, firms are expecting takings to fall by 9.7% in 2020.

While nearly one-in-three firms expect to continue trading using only their existing funds and without cutting costs/restructuring, many firms will require some level of cost cutting and/or additional financial assistance to continue trading.

Many mid-market businesses are focused on building organisational flexibility, digital transformation and refined business processes to better manage the uncertainty they face.

Francesca Lagerberg global leader, Grant Thornton International Ltd says: “Investment in R&D and tech is an investment in the future and, for many businesses, the only way out. These findings demonstrate mid-market businesses are looking to build sustained resilience into their operating models to survive the economic fallout of the pandemic, and to ensure their viability over the long-term.

“Necessity is the mother of invention and has been the key to digital transformation. COVID-19 enforced lockdowns has seen many businesses achieve years of digital transformation in the space of two to three months, which is unparalleled.

“As government support is withdrawn in many markets, the question remains whether firms have made the right investments and transformed in a way that will improve their chances of survival.”

Actions taken or planned to deal with the COVID-19 outbreak (top 3):

• Implemented home/remote working and or flexible working: 52.9% of global mid-market businesses.
• Adjusted business strategy: 46.7%
• Changed working patterns within operations: 45.3%

Future areas of business strategy to change after the COVID-19 crisis (top 3):

• Improvement in organisational flexibility: 46.2% of global mid-market businesses.
• More use of technology and digital transformation: 45.6%.
• Improvement in crisis management process: 42.2%

Other key figures include:

• Optimism: 43% of firms reporting a slightly or very optimistic outlook for their country’s economy over the next 12 months. This is the lowest level since the eurozone crisis of 2011-2012.
• Revenues: 34% of firms are expecting an increase in Revenues in the next 12 months, down from 54% in H2-2019 and comfortably a survey-record low (beginning Q2-2011)
• Economic uncertainty: 66% of firms identify uncertainty as a business constraint (with nearly 1-in-3 firms identifying it as a major constraint).
• Demand constraints: 55% of firms identify a shortage of orders as a constraint to business, with nearly one-in-four firms identifying it as a major constraint.
• Staffing: less than 30% of firms anticipate hiring new staff in the next 12 months, down from nearly one-half in H2-2019.

Any media enquiries can be referred to Thor Bostelmann, Global Corporate Communications Manager at thor.bostelmann@gti.gt.com.