[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Almost half of US and UK firms expect recession in 2020

Just under half of US and UK firms expect their country to go into recession this year, although Chinese companies predict solid growth, a global survey of senior executives has uncovered.

Trade tensions spark recession fears ©iStock
Trade tensions spark recession fears ©iStock

The findings show that 45% of medium-large sized US firms expect a recession in 2020, with almost one in five predicting the economy to shrink, most likely by 1-3%.

In the UK, 46% of companies forecast a recession, with a third expecting the economy to be smaller by the end of the year.

This is in sharp contrast to the situation in China, where a massive 93% of firms are confident that the economy will expand in 2020, with 25% predicting growth of 4-5%.

The US and China agreed a trade deal yesterday after an 18-month standoff, however, the Stenn Group, which carried out the research, warned of continued risks to global trade.

“The capricious US-China tariff war has turned into a political theatre, while trade in and out of the UK after Brexit is still under threat,” said Stenn Group president Dr Kerstin Braun.

"With the agreement on January 15th, one part of the trade war might come to an end, but the tech war is likely to continue with no solution in sight.”

The survey of over 700 senior executives also looked at what are the largest risks to business in 2020.

Geopolitical tensions, such as trade tariffs, Brexit or regional instability, were the top risk cited by UK companies, followed by increased environmental concerns and climate change.

In China, changing consumer behaviour, such as shopping online rather than in store, was ranked the top risk, followed by a global recession or international financial crisis.

US companies gave an equal weighting on the risk of increased geopolitical tension, environmental concerns, and changing consumer behavior to businesses in 2020.

Dr Braun warned that geopolitical tensions hampered economic growth in 2019 at the expense of real businesses.

“The uncertainty impacts short-term margins and long-term investment plans for companies with international supply chains," she continued.

"2019 was weaker than expected and the stakes are only higher for the year ahead."

Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession