The Conference Board Measure of CEO Confidence™ for Europe by ERT for the second half of 2021 was 63, down from 77 in the first half of 2021. (2) The overall Measure is based upon responses to questions about current economic conditions, and expectations for the economy and own industry six months out. A reading above 50 points reflects more positive than negative responses.

Insights for What's Ahead

• Confidence moderates among European CEOs and Chairs in the second half of 2021, compared to the first half of the year, but nonetheless remains firmly in positive territory, at 63. (A reading above 50 points reflects more positive than negative responses.) While business leaders rate the current economic situation favorably, concerns about the short-term outlook overall and about their industries emerge. These concerns may be prompted by supply chains delays, emerging labor shortages and increasing energy prices. The emerging fourth COVID-19 wave in Europe adds more uncertainty. However, despite these challenges, The Conference Board estimates that economic growth will stay well above trend in Europe in 2022 and 2023.¹
• Asked at the cusp of the COP26 global climate conference in Glasgow how more ambitious targets for emissions will impact their businesses, European CEOs and Chairs emphasize increasing costs. Close to a majority believe the “Fit for 55” package will have little or no impact on revenues, and nearly two-thirds foresee little or no impact on employment. In contrast, views are more polarized on profits and international competitiveness. More than a third feel both will likely decline. At the same time, 21 percent think profits will be impacted positively, and 25 percent believe it will improve international competitiveness.
• When it comes to inflation, close to half of CEOs and Chairs expect several of the drivers—such as transport costs, energy prices, and supply shortages—to subside throughout 2022. This expectation is consistent with the view of the European Central Bank, which is not planning to increase interest rates in 2022 and has so far announced only a moderation in asset purchases.
• Hiring expectations strengthened among European CEOs and Chairs in the second half of the year. The sub-index is above 50 both inside and outside of Europe, indicating more positive than negative views. Meanwhile, higher wages that may result in greater inflation are not expected to subside in the short term. One-third of respondents expect wage pressures to persist through 2023 and an additional 30 percent beyond 2023. Nearly half of respondents expect labor shortages to persist beyond 2023.

 [1] The Conference Board Global Economic Outlook 2022, 3 November 2021.