This year Europe's corporate optimism has declined: evidenced by a dramatic downfall of corporate performance reported by its top business leaders over the last 12 months. As a result executives are cautious in their predictions for the future.
Despite endorsement of EMU membership 12 months ago, and its benefits for business, professionals are also collectively sceptical about the euro's positive financial impact on business, but seem more certain of its long-term prospects, predicting the euro will challenge the US$ as the premier global currency.
With the prediction that the economic situations in Asia, Russia and Brazil will have little impact on their future business success, Europe's business elite still see the global economic climate as having the most significant impact on their business. This year the decline in Asia's future as tomorrow's growth centre was confirmed as business leaders continue to strongly refocus their attention on Western Europe.
EURO TO CHALLENGE US DOLLAR AS LEADING GLOBAL CURRENCY
With E-Day only days away at the time of surveying, the results show that only 44% of business leaders believe their companies will be better off financially over the next 12 months with the euro. This contrasts with the previous two years where two-thirds believed EMU membership would benefit their company. However, and most significant, a similar proportion this time believe the new currency will replace the US$ as the world's most important international currency. Unsurprisingly the British are the most negative about the euro's future, and the Belgians express the greatest confidence with 51% predicting the single currency will emerge as the world's most dominant currency in just ten years.
MAJOR DOWNTURN IN PERFORMANCE AND OPTIMISM FOR EUROPE'S TOP COMPANIES
Last year's corporate optimism is resoundingly unfulfilled. This year, only 30% of executives now actually report an improvement in their business, compared with nearly twice as many (57%) who forecast a net improvement (better minus worse) for these past 12 months, and 51% who had reported a net improvement in performance 12 months ago. Not surprisingly net corporate optimism for the next 12 months is down by similar levels to 31%.
There are some significant differences between countries: most notable is a marked drop in corporate performance levels reported by the UK resulting in it surpassing France as the lowest in Europe. Germany also takes over France's three-year reign as having the most gloomy business prospects. This year's key findings also reveal renewed buoyancy within Spanish companies, including best-reported corporate performance and highest net optimism. In addition, Europe considers that Spain will show strongest economic growth over the next three years.
DOOM AND GLOOM FOR MANPOWER FORECASTS
The major downturn in business performance and optimism is mirrored in a sixth year of predicted workforce decreases. Britain has hit an all time low showing an alarming switch from job growth to dramatic job loss for the first time in three years.
This year it is only the Netherlands and Spain that show a hint of hope for workforce numbers, both predicting small increases for their own companies next year.
GERMAN BUSINESSES RIDE HIGH
While German companies remain the most pessimistic about future performance, Europe puts Germany in top spot again for export growth and lowest inflation. Overall German companies are the clear favourites for business practices. Voted as having the most dynamic business leaders and most likely to reinvest their business profits, European executives agree that German companies are cutting edge, the easiest to do business with and the most employee and customer focused.
WESTERN EUROPE BECOMES VACCINATION AGAINST ASIAN FLU
Whilst the global economic situation is considered to be the most important influence on businesses, the Asian, Russian and Brazilian crises are thought to have minimal impact on Europe's companies over the next 12 months. Furthermore, the preoccupation with Asia's potential is weakening. Where businesses three years ago were almost equally likely to forecast their future revenues in the early 21st Century to come from Asia and Western Europe, this year the prediction has shifted almost entirely away from Asia (from 31% in 1995 to 6% this year). As a result the majority now anticipate Western Europe as the most critical source of revenue growth through the following decade.
ELECTRONIC TRANSMISSIONS SURGE
European senior executives are making even more use of communication technologies with a majority of them now individually surfing the Internet, a significant increase from last year. The use of E-mail has now even outstripped the numbers using mobile phones and almost all companies are on the Internet for extensive multiple purposes including marketing and sourcing information. The dawn of widespread E-commerce is still to come, stalled somewhat by perceived lack of customer demand.
Finally, as the Millennium approaches, concerns about the effects of compliance on business leaders' personal lives varies. Most Germans think that there is nothing to worry about, while nine in ten UK executives are concerned, especially about travelling.
PREDICTED CODES OF CONDUCT
Flexitime looks likely to be widespread within five years according to all those surveyed. British business leaders are likely to adopt a casual dress day and home-working, and the Dutch forecast more crèche facilities. A significant number of French companies anticipate a four-day week. The two essential ingredients to make the most dynamic business leader are thought to be a spoon full of motivation and a dash of creativity. This recipe for success is followed by most Europeans doing lunch with their important customers. However, Italians like winning their business over dinner or breakfast instead.
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