CEO Confidence Drops in Europe
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The Conference Board Measure of CEO Confidence™ for Europe by the European Round Table for Industry (ERT) is back in negative territory in H2 2024. Six months ago, the measure had just climbed back to a relatively healthy 58. Now, however, at 47, the measure signals disappointment among executives in current economic conditions and a lack of optimism for the future. Confidence about the general business outlook in Europe dropped below the levels in other world regions.

However, an overwhelming majority of CEOs agreed that fully implementing Draghi’s proposals would improve business conditions in their industries and motivate them to invest again in Europe rather than in other regions. The ‘Draghi effect’ would be triggered by achievements such as regulatory simplification, progress in EU Single Market integration, and a successful implementation of Draghi’s vision for a decarbonized economy. Finally, in the wake of EU tariffs on Chinese Electric Vehicles, CEOs see greater merit in other strategies vis-à-vis China’s industrial overcapacity.

Trusted Insights for What’s Ahead

The Conference Board Measure of CEO Confidence™ for Europe by the European Round Table for Industry (ERT) is back in negative territory in H2 2024. Six months ago, the measure had just climbed back to a relatively healthy 58. Now, however, at 47, the measure signals disappointment among executives in current economic conditions and a lack of optimism for the future. Confidence about the general business outlook in Europe dropped below the levels in other world regions.

However, an overwhelming majority of CEOs agreed that fully implementing Draghi’s proposals would improve business conditions in their industries and motivate them to invest again in Europe rather than in other regions. The ‘Draghi effect’ would be triggered by achievements such as regulatory simplification, progress in EU Single Market integration, and a successful implementation of Draghi’s vision for a decarbonized economy. Finally, in the wake of EU tariffs on Chinese Electric Vehicles, CEOs see greater merit in other strategies vis-à-vis China’s industrial overcapacity.

Trusted Insights for What’s Ahead

  • The Conference Board Measure of CEO Confidence™ for Europe by ERT deteriorated, from a positive 58 six months ago, to a relatively bleak 47 in the second half of 2024, likely driven by a weakening growth outlook in Europe due to a prolonged manufacturing recession, slower growth in services, weak domestic consumption, and trade headwinds.
  • Two out of three subcomponents of the confidence measure—views around current economic conditions, and six-months ahead expectations for the economy—return to pessimistic territory, while six-months expectations for conditions within own industry remain borderline positive.
  • A significant gap persists in CEOs’ assessments of business prospects inside and outside Europe. Their outlook on employment and investments outside Europe remains strong at 60, bolstered by optimistic sales expectations. In contrast, perceptions of the European market have declined for the third consecutive time, dropping from a neutral 50 in H1 2024 to 49.
  • Lower expectations for employment and investment contribute to CEOs’ pessimistic views on Europe’s overall business outlook, with the gap in their assessments of business prospects inside and outside of Europe remaining pronounced by our survey’s historical standards.
  • CEO Confidence deteriorated globally, but the fall is steeper in Europe. In the US, the quarterly-published measure retains its positive momentum, deteriorating marginally, from 52 in Q3 2024 to 51 in Q4 2024. Meanwhile in China, overall confidence among China-based CEOs of US and European multinational companies (MNCs) declined from a cautiously optimistic 56 in H1 2024 to 49 in the second half of the year. All three surveys were completed before the US elections.
  • CEOs in our survey show overwhelming confidence in the positive impact Draghi’s recommendations would have for Europe’s businesses. Some 86% of CEOs in our survey express confidence that, if implemented under the new Commission’s term, the recommendations in the Draghi report, aimed at improving Europe’s economy and addressing its global competitiveness, will improve conditions for their industries.
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Author

Konstantinos Panitsas

Konstantinos Panitsas Konstantinos Panitsas

Economist
The Conference Board

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