CEO confidence in Europe down to 24 points in H2 2022: Report

The Conference Board Measure of CEO Confidence for Europe (11th edition) by the European Round Table for Industry (ERT) ranges from 0 to 100. Double-digit inflation linked to record-high energy costs, has dented business confidence. The repercussions of the war in Ukraine have left an overwhelming majority of CEOs and chairs in Europe feeling particularly pessimistic about the current economic outlook, according to a press release by the ERT.

Almost 9 out of 10 respondents (87 per cent) expect the economic outlook to worsen in the next six months. They are also markedly pessimistic about the short-term prospects regarding their own industries, with 71 per cent of CEOs expecting business conditions to worsen in their sector.

“We are still at real risk of a wave of deindustrialisation, as ongoing high energy costs undermine the global competitiveness of European production sites. The results of this latest survey indicate that this is a trend that will probably continue. Nevertheless, ERT members’ commitment to Europe’s green future is unwavering and our investment in the green transition is set to continue and even increase. Competing regions are adapting quickly to the current context—the US Inflation Reduction Act is an example of this,” said Martin Brudermuller, chair of ERT’s committee on competitiveness and innovation, and chairman of the board of executive directors of BASF.

Twenty-two per cent of CEOs and chairs in Europe do not envisage energy prices returning to 2019 levels before 2024, and another 22 per cent do not see this happening in 2025 either. Notably, the relative majority of the remaining business leaders polled (38 per cent) believe energy prices will never return to their 2019 rates—a finding that is consistent with the results of the last survey in H1 2022.

In view of high energy costs in Europe, 32 per cent of leaders are temporarily ceasing or downsizing their operations in Europe, and 15 per cent expect to do so on a permanent basis. Persistently high energy costs put immense pressure on businesses and impact their global competitiveness. In such a setting, a deindustrialisation of Europe becomes a very real possibility. More than a third of CEOs and chairs (34 per cent) plan to temporarily either pause or decrease their investments in existing businesses. Fifteen per cent intend to do this permanently, added the release.

In spite of the challenging landscape and a particularly pessimistic economic outlook, 91 per cent of CEOs and chairs intend to either increase their investment in green energy or make no changes to current investments plans in Europe. In fact, a sizable share of respondents (59 per cent) plan to permanently increase their investments in green energy technologies, a portion larger than those planning to do this on a temporary basis (48 per cent).

The Conference Board Measure of CEO Confidence for Europe polls corporate leaders and members of the ERT. This 11th edition of the semi-annual survey gauged sentiment among the ERT members on a range of topics, including economic outlook, investment, energy transition, climate targets, and the business and geopolitical implications of the war in Ukraine. The survey was conducted during October.

ALCHEMPro News Desk (NB)