Outlook for european business more upbeat than in recent years according to survey of business owners

  • fourteen-year trend data shows exports across EU have dropped since the 1997 peak
  • enthusiasm for joining eurozone is diminishes further in UK and Sweden
  • balance in favour of EU enlargement continuing


The findings from the Grant Thornton International Business Owners Survey (IBOS) 2006, offer the most in-depth and continuous insight into the attitudes of business owners across Europe since the creation of the European Single Market in 1992. The report provides 14-years of trend data allowing a comparison of the relationship between the economic environment and expectations of turnover, profits, employment and investment. It also captures the changes in business owner’s attitudes towards exports and their experience of payment of sales invoices.

The results of the 2006 survey provide encouraging evidence of further gradual recovery from the global turndown in 2003 when several EU countries were in recession. Since 2003, economic activity has seen a mild improvement and is reflected in the survey findings over the past two years, with strong economic performance in the strong economic upturn at the end of 2005.

Frédéric Zeitoun, Grant Thornton France, said: “Grant Thornton International believes this report is the only survey to provide year on year comparative data and analysis of the attitudes of medium-sized businesses within Europe since the creation of the European Single Market in 1992. The overall impression from the survey is that expectations about turnover, selling prices, employment and investment have picked up and the economic outlook in the eurozone appears rather more upbeat than in recent years.”

Exports are stagnating


EU exports have not recovered from the 1997 peak when 64% of medium-sized businesses reported that they exported; although the downswing may have leveled out, the proportion of businesses exporting has remained in the low 40s for the past four years. The most significant drop was seen in Greece, Italy and France. The main reason for the drop appears to be subdued state of demand in Germany, the largest market in the EU. Further survey results suggest the outlook remains week for EU exports and the best that can be hoped for is a bottoming out of the decline.

OUTLOOK FOR EUROPEAN BUSINESS MORE UPBEAT THAN IN RECENT YEARS ACCORDING TO SURVEY OF BUSINESS OWNERS


Support for adoption of the euro by business owners is waning


The lacklustre economic performance of the eurozone has contributed to a further decline in support for the euro in non-participating countries (Sweden and the UK). This has been reinforced by solid output growth and low unemployment in the Swedish and UK economies. Support for the single currency is at its lowest level on record in both Sweden (74%) and the UK (35%).

OUTLOOK FOR EUROPEAN BUSINESS MORE UPBEAT THAN IN RECENT YEARS ACCORDING TO SURVEY OF BUSINESS OWNERS


Increased regulations impacting operations as a result of EU enlargement


When questioned about the impact of EU enlargement from 15 to 25 countries in 2004, 47% of respondents stated that increased regulations have been a result, a steep increase from 32% in 2005. Most affected businesses are in Poland, Ireland and Greece, where more than 60% of respondents cited this issue. In contrast, the proportion of respondents saying the enlargement had a negative effect on foreign inward investment had dropped to 18%, compared to 30% expecting less foreign investment in last year’s survey.

OUTLOOK FOR EUROPEAN BUSINESS MORE UPBEAT THAN IN RECENT YEARS ACCORDING TO SURVEY OF BUSINESS OWNERS
OUTLOOK FOR EUROPEAN BUSINESS MORE UPBEAT THAN IN RECENT YEARS ACCORDING TO SURVEY OF BUSINESS OWNERS


Balance in favour of EU expanding remains positive


Businesses in Ireland, Poland and Spain, where the benefits of EU membership have been significant, showed greatest enthusiasm for further enlargement. However, businesses in Germany are only marginally in favour while the Netherlands showed a large negative balance, reflecting the poor media coverage the EU constitution received last year.

OUTLOOK FOR EUROPEAN BUSINESS MORE UPBEAT THAN IN RECENT YEARS ACCORDING TO SURVEY OF BUSINESS OWNERS


Payment periods are improving


The average payment period for sales invoices in the EU improved between 1993 and 1999 from 65 to 55 days, reflecting the success of EU legislation in speeding up payments. Since 1999, the period has remained stable with France making the greatest reduction in payment days since the creation of the European Single Market in 1992.

ENDS

Notes to editors

The Grant Thornton International Business Owners Survey (IBOS) was carried out among more than 7,000 owners of medium-sized businesses from 30 countries during Q4 2005. IBOS began in 2002 and builds on the European Business Survey (EBS) which Grant Thornton International ran from 1993 to2001. The research was conducted by Experian Business Strategies Limited and Harris Interactive. To find out more about IBOS and to obtain copies of IBOS supplements, as well as the global report.

About Grant Thornton International


Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist advice to independent businesses and their owners. Grant Thornton International is a non-practicing international umbrella organisation and does not deliver services in its own name. Each member and correspondent firm in Grant Thornton International is a separate independent national firm.

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Nan Williams, Paul Donlon or Greg Moore, Grant Thornton International Press Office.
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