Divergence in Confidence: European CEOs See Brighter Prospects Abroad

European CEOs’ assessments of business conditions inside and outside of Europe have diverged to the highest levels ever recorded. Concerns over persistently weak economic growth are pushing many corporate executives to prioritize commercial opportunities abroad.

The 2024 biannual survey of business leaders by the European Round Table for Industry (ERT), a long-standing Brussels-based lobby group, revealed that European CEOs’ confidence in their companies’ prospects outside of Europe surged to a three-year high in the first half of this year, while expectations within effectively stagnated.

In particular, the ERT’s aggregated measure of business confidence outside Europe increased from 59 to 63 in the second half of 2023 to the first half of this year. The evaluation of commercial prospects inside Europe slid slightly from 51 to 50 over the same period. This discrepancy—the highest ever recorded in the survey’s seven-year history—was especially marked regarding investments and sales.

Just 27% expected investments to increase within Europe over the next six months, compared to 57% anticipating greater investment growth abroad. Similarly, 40% believed sales would moderately increase within Europe over this period, compared to 70% outside Europe.

Employment expectations within the bloc also fell to a three-year low, with more than a third of business leaders projecting a decline in employment over the next six months, compared to just over one in ten outside of Europe.

Ilham Kadri, head of Syensqo and chair of ERT’s Committee on Competitiveness and Innovation, remarked, “Leaders are optimistic for their companies’ investment and employment outside Europe—but within Europe, expectations are a lot less bright.”

“As a place to do business, Europe seems stuck in a path of relative decline,” she added, warning, “Europe’s incoming leadership has to prioritize achieving a turnaround that puts competitiveness front and center of the work program from here to 2030.”

In terms of the main policies required to boost competitiveness, the overwhelming majority (91%) cited the need to improve and simplify the regulatory environment. Deeper single market integration—a major point of focus among EU leaders in recent months—and the need to boost innovation and technological leadership were also named top priorities.

Additionally, the survey found that business leaders are increasingly worried about Europe’s defensive capabilities, with nearly four in five claiming that they are “not confident” or “not confident at all” that enough is being done to boost defense readiness.

The survey also provided a detailed analysis of views on the chief risks to Europe’s increasingly tense relationship with China. A majority cited the EU’s efforts to “de-risk” from Beijing and China’s industrial overcapacity as primary sources of friction. Meanwhile, more than half saw China’s relations with the US as a severe roadblock to the EU-China relationship.

Other noted sources of tension included access to critical raw materials, trade in green technologies, industrial espionage, and cyber-security. Notably, only roughly a third regarded China’s increasing economic ties with Russia as a significant source of tension between Brussels and Beijing.

European executives were significantly more pessimistic about the future of EU-China relations than their Chinese counterparts: more than half said they expected relations to worsen over the next three years, compared to just over a third of China-based CEOs.

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