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Surging Confidence Among European Business Leaders Despite Strains on Supply Chains

CEOs and chairs of Europe’s largest companies are increasingly optimistic about economic and business prospects for the remainder of 2021. Based on a semiannual survey of over 50 top firms, The Conference Board Measure of CEO Confidence™ for the European Round Table for Industry (ERT) stands at 77 for the first half of 2021 (H1 2021)—up from 61 in H2 2020, and just 34 in H1 2020, the nadir of the pandemic one year ago. (A score above 50 points reflects more positive than negative responses.) Sentiment regarding expectations for the economy over the next six months is the main driver behind this improvement. Europe’s sky-high confidence matches the latest readings from our Measure of CEO Confidence™ for the US.

EXECUTIVE SUMMARY

Insights for What’s Ahead: The Conference Board Measure of CEO Confidence™ for Europe by the European Round Table for Industry (ERT)

  • CEOs and Chairs of some of Europe’s largest companies are increasingly optimistic about the business and economic outlook for 2021. Overall, the measure of CEO Confidence for Europe increased substantially, from 61 in the second half of 2020 to 77 in the first half of 2021. (A reading above 50 indicates more positive than negative responses.) Sentiment regarding expectations for the economy over the next six months is the main driver behind this improvement, skyrocketing to 81 from 57 in H2 2020.
  • The pace of the vaccination campaign in Europe is the number one factor affecting the economic revival. Should companies play a role in accelerating the campaign? Nearly all CEOs and Chairs surveyed agree that they should provide information, but only half of them think they need to go further and provide jabs on-site.
  • Forty percent of companies consider the shortage of supplies for production of goods as highly disruptive, ranking it as the top risk over the next six months. Tight transport capacity and trade tensions are also considered as potentially highly disruptive over the next six months. Amid COVID-19 related restrictions, and new barriers to trade, 64 percent of respondents are reorganizing their supply chains, and nearly two-thirds of those are putting permanent changes in place.
  • The aggregate index on sales, capital investment, and employment improved in 2021, both in Europe and abroad. For Europe, the index, launched in the second half of 2017, hit a record high of 60. As far as sales and capital investment are concerned, CEOs’ expectations are aligned regarding a brighter outlook globally, while views on employment expectations diverge. The index for near-term employment prospects outside of Europe increased to 57 while, in Europe the reading is below 50, implying more negative than positive responses.
  • Since the start of the pandemic, accelerating digital transformation has become urgent for businesses. Survey responses show that most companies are currently working on key dimensions of digital transformation, including acquiring new software, developing training programs for workers, and creating partnerships with universities and startups. What is not a part of the strategy is reducing workforces or hiring contingent workers. 

AUTHORS

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Ilaria Maselli

Senior Economist
The Conference Board

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Konstantinos Panitsas

Research Associate
The Conference Board


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CEO Confidence

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