PwC sees economic uncertainty peaking

The current political and economic climate has contributed to some of the highest levels of uncertainty seen for decades, according to the latest Global Economy Watch of PwC.

“Indeed, in recent years, uncertainty has been keeping business leaders busy. CEOs have responded in several ways –from insuring against the potential costs of cyber attacks, to stress-testing their operations and finances under alternative economic scenarios,” said Csaba Polacsek, Director of Financial and Transaction Advisory Services at PwC Hungary. “Businesses that have invested resources in such areas are likely to be better prepared for a future that remains highly uncertain. According to our CEO Pulse Survey, 30% of business leaders expect at least one crisis to hit their business within the next year,” he added. 

The impact of uncertainty cuts across all sectors of the economy, affecting households, businesses and financial markets, PwC says. This uncertainty can possibly reduce consumer spending to safeguard against potential falls in income, can push businesses to cut back on production, investment and employee compensation, and can make investors require a higher rate of return on their capital through higher risk premiums.

“Policymakers have an important role to play as they can reduce levels of uncertainty by ensuring any future changes to the regulatory environment are as gradual and predictable as possible, while retaining the flexibility to act quickly if a major crisis does strike,” Polacsek noted.