In the first half of 2024, the confidence of managers at large European companies has increased compared to the previous year. However, its sales, investment and employment expectations are much more positive in relation to its operations outside Europe than within the Union. This increase in confidence is highlighted in a survey published on Wednesday by the European Round Table (ERT) , a forum that brings together 57 CEOs and presidents of important companies from the European Union, the United Kingdom, Norway and Switzerland. These include the Spanish Telefónica, Iberdrola, Inditex and Ferrovial. The study also reveals a growing fear of a deterioration in relations between the EU and China, and that nine out of ten business leaders consider European regulation to be the “main obstacle” to competitiveness in Europe.The level of business confidence increased from 42 to 58 points in the first half of 2024 (on a scale of 0 to 100), reaching its highest point since May 2022, after the start of the Russian invasion of Ukraine. This growth is mainly due to better business prospects outside Europe, where the confidence index rose from 59 to 63 points in one year, while within the continent it remained almost stable at 50 points. This is the largest difference recorded in the seven years of the survey, attributed to lower expectations of economic growth in Europe. Specifically, 57% of business leaders plan to increase their investments outside Europe, compared to 27% who will do so within of the continent. Additionally, 36% expect job cuts in Europe, compared to 11% outside Europe. Although sales expectations in Europe have improved, with four in ten leaders expecting an increase, these figures are still lower than expected. abroad, where seven out of ten anticipate growth. “Europe seems stuck on a path of relative decline as a place to do business. Future European leaders must prioritize a change that places competitiveness at the center of the agenda until 2030,” commented Ilham Kadrhi, CEO of Syensqo and president of the ERT Competitiveness committee.
Relations with China, deteriorating
In this edition, the survey investigated relations between the EU and China, and European managers anticipate that they will continue to be “difficult” due to “geopolitical tensions” and “trade conflicts.” More than half (54%) expect these relations to worsen in the next three years, compared to 7% who foresee an improvement. However, managers of Western multinationals based in China are somewhat more optimistic: 45% expect a deterioration, while 19% anticipate improvements. The main points of conflict include the EU's strategy to mitigate risks in their relationship with China and dependence on the Asian giant, China's excess capacity in certain sectors, and the possible worsening of relations between Beijing and Washington, with the United States pressuring the EU to adopt a firmer stance towards China. More than half of respondents (54%) mention one of these factors, followed by the EU's access to critical Chinese raw materials (50%), unequal trading conditions and trade in green technologies (48%), and industrial espionage (48%).
Regulation as the main obstacle
Internally, managers almost unanimously (91%) urge to improve and simplify European regulation to boost competitiveness, since the “complexity and incoherence” of the rules represents the “number one risk” for it. Seven out of every Ten business leaders call on future political leaders emerging from the upcoming elections to prioritize greater single market integration (73%) and promote European innovation and technological leadership (71%). In addition, six out of ten advocate favoring the ecological (63%) and digital (56%) transition of the industry. Follow all the information from Cinco Días on Facebook, x and Linkedin, or in our Five Day Agenda newsletter
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