The 13th edition of their semi-annual survey, involving CEOs and Chairs of prominent European industrial and technology companies, has shown a marked decline in business confidence, signaling challenges ahead for the European economy.
The survey's striking revelation is the drop in the Conference Board Measure of CEO Confidence™ for Europe, which fell from a barely positive 53 to a pessimistic 42 since April 2023. This index, ranging from 0 to 100, is a bellwether for economic sentiment, with figures above 50 indicating optimism. The decline reflects a stark reality: 61 percent of Europe’s corporate leaders now see the European economy performing worse than it did six months ago.
A central concern highlighted in the survey is the impact of regulatory environments on European competitiveness. An overwhelming 56 percent of CEOs believe that a 'complex and/or incoherent regulatory environment' will significantly impact competitiveness in the next three years. This concern is compounded by the lack of confidence in policymakers’ actions to reduce regulatory burdens or improve regulatory coherence, with 83 percent of industry leaders expecting no ambitious action in this area.
While the survey paints a somewhat bleak picture of Europe's current economic and regulatory landscape, it also sheds light on the sentiment towards Europe’s green transition. There is a notable optimism regarding policy actions for green investments, with 87 percent of ERT members feeling somewhat or very optimistic about ambitious actions from EU policymakers. However, concerns arise regarding the practical aspects of this transition, particularly in building the necessary physical infrastructure and the availability of skilled workers.
The fall in economic confidence is not unique to Europe. Similar trends are observed in the United States and China, though the severity differs. In the United States, the quarterly Measure of CEO Confidence™ also experienced a decline, while in China, the confidence measure remains positive but has significantly dropped from a record high six months ago.
The survey results serve as a clarion call for European leaders and policymakers. The need for coherent and streamlined regulation, alongside a pragmatic approach to the green transition, is critical. As Martin Brudermüller, Chair of ERT’s Committee on Competitiveness & Innovation, and Chairman of the Board of Executive Directors of BASF, emphasizes, Europe must act swiftly to tackle these challenges to prevent irreparable damage to its global competitiveness and societal stability.
“The economic picture in Europe is growing gloomier, with significant concerns about the state of European competitiveness” said Sara Murray, Managing Director, International, The Conference Board and added “Business leaders are telling us that Europe needs to take action to improve administrative processes for business and make more progress on Single Market integration. The green transition is obviously an area where Europe can compete globally, but there needs to be better regulation to make that a reality. Otherwise, European business leaders will choose to invest in China and other parts of Asia.”
As we navigate through a landscape of economic uncertainties and regulatory complexities, the insights from this survey provide valuable guidance for the future direction of European industry and policy. The next steps taken by European leaders and policymakers will be crucial in shaping not only the economic recovery of the continent but also its role as a competitive and innovative force on the global stage.
You can download the full survey results here.
