Global business optimism at an all-time high, Brits are out of tune
Business leaders in North America, Europe and China are according to new research increasingly positive about their economic outlook. The Brits are however becoming more and more pessimistic, for a large part the result of Brexit sentiment.
The research, conducted by Grant Thornton, is based on the views of more than 2,500 CEO’s, entrepreneurs and other senior executives from a range of sectors, based in both large multinationals as we well as mid-sized enterprises in more than 35 countries globally.
The findings show that global business optimism hit at an all-time quarterly high of 51% in the second quarter of this year. This represents five consecutive quarters of increases in optimism. Healthy confidence is evident in the US, where under President Donald Trump’s reign optimism has hit a record level of 81%. The outlook of the most important economic superpower in Asia, China, grew to 48% – a near three year high.
As a trading bloc, the European Union (EU) has seen optimism rise from 39% to a two year high of 50% in the last quarter. Just a year ago it was 35%. Businesses in Germany are among the most optimistic, with the score up from 72% in the previous quarter to 76% in Q2. France showed remarkable recovery in the most recent survey – the country’s score grew from 19% to 43%, lifted by the positive vibe surrounding newly elected President Emmanuel Macron. The change of mood in Southern Europe has been even more dramatic with a rise from 23% in the last quarter to 45%.
UK confidence takes a blow
UK business optimism, however, remains subdued; currently standing at 22%. In comparison, one year ago the level stood at 40%, and two years ago it was 79%. “It’s understandable that UK businesses will be feeling somewhat at odds with their international counterparts, given the continued uncertainty on Brexit negotiations, and wider political and economic instability over the past two years”, commented Robert Hannah, Chief Operating Officer at Grant Thornton UK. In line with the sliding confidence, the outlook for UK company revenues and profits declined in step and are now 49% (61% in Q2 2015) and 43% (57% Q2 2015), respectively. “The position is one that looks increasingly out of step with a Europe on the up.”
One of the key drivers for growing global optimism is exports, finds the study. while planned export activity has hit an 18-month high, with Germany (up 13% to 35%), Greece (up 8% to 34%), India (up 6% to 34%), the Netherlands (up 12% to 30%) and Ireland (up 10% to 28%) the countries with the greatest increases in planned exports over last quarter. “This suggests businesses are aiming to tap into the US market, resurgent under the new administration. The strong US dollar puts imports at an advantage compared to local products”, said Paul Raleigh, Global Leader of Grant Thornton’s Growth and Advisory services wing.
Looking ahead, Hannah said UK businesses should not be held back by the widening gap between global and local and instead focus on making sound (financial) decisions. She stated, “As we’ve historically seen in times of uncertainty, businesses that make prudent investments in adverse times generally stand to gain the most in an upswing. Particularly at a time of continued low borrowing costs, businesses should be looking not just at the immediate business climate, but also taking a longer view of their operations, exports and people strategies to ensure they’re in an internationally competitive position, whilst the details of our exit from the EU continue to be ironed out.”
