The European recovery is gaining momentum according to a major survey of business leaders, but several threats, from Greek debt negotiations to high unemployment, continue to undermine European stability and long-term business growth prospects.
Grant Thornton's International Business Report interviewed more than 1,100 regional executives about their attitudes towards Europe’s future. The findings of The Future of Europe 2015 report reveal that EU business leaders are more optimistic (38%) compared with the global average (33%) for the first time in almost four years. It also shows that business leaders in some of the economies hit hardest by the slowdown, including Ireland (92%) and Spain (52%), are some of the most optimistic globally.
Michael Crowe, a director at Grant Thornton in the Isle of Man, said the report is important reading for Island businesses.
He explained: ‘Europe, including the UK, is amongst the Isle of Man’s biggest customers, so the stability of national economies throughout Europe is vital to us. In addition, we have felt the benefits of international investment in Europe in the past, and returning confidence may help those opportunities return.
‘The headline findings of the report are encouraging, demonstrating growing confidence and ongoing recovery, and this despite there being major hurdles to negotiate such as the Greek debt issues. However, as the report reveals, there remain serious question marks about long-term stability in the EU, with factors like the promise of a UK referendum on EU membership to consider.
‘As our economy adapts to the changing face of the EU, this IBR report will be useful to many Island businesses and the Government in detailing how EU business leaders see the future.’
Commenting on the findings, Grant Thornton global CEO Ed Nusbaum said: ‘On the surface, the situation in Europe still looks tricky, from ongoing debt negotiations with Greece to tensions with Russia. However, business leaders are clearly feeling more confident as economic growth accelerates and uncertainty subsides over the ability of Europe's banks to deal with a “Grexit”.
‘Our survey even shows hiring expectations at a four-year high which is positive news for the millions of unemployed across Europe and long-term business growth prospects. The fall in value of the euro has also helped exporters and we have seen a steady increase in overseas sales expectations of businesses across the region.’
The IBR report highlights long-term concern among Eurozone business leaders, including high unemployment (25%), growth rates which remain tepid by pre-crisis standards (23%), high levels of debt (30%) and the rise in popularity of populist parties (24%).
Mr Nusbaum added: ‘Europe faces a number of challenges which impact on the ability of business leaders to grow their operations. But the good news is that the programme of quantitative easing launched by the ECB seems to have had a positive effect while low core inflation is providing a temporary boost to disposable incomes.
‘Clearly policymakers need to look at how to make job markets more competitive and get more young people back into work if the anti-EU sentiment stoked by populist parties is to be contained. Otherwise social unrest and skills atrophy are only going to rise, constraining long-term business growth prospects.’
You can download the IBR report The Future of Europe 2015 from www.grantthornton.co.im.
Photo- Michael Crowe
