Dutch businesses buoyant about economic outlook, says Eden McCallum

While a pessimistic economic outlook among businesses in the turbulent geo-political environment of the UK has hardened over the past 12 months, Dutch businesses have remained positively buoyant by comparison. The two years leading to 2018 have seen nearly 9 out of 10 business leaders in the Netherlands become optimistic about what the next two years have in store.

The fifth annual economic outlook survey by Eden McCallum gathered the views of almost 200 senior Dutch business leaders to assess where sentiment lay after a turbulent political year globally. The survey found that 89% of the businesses surveyed are optimistic about prospects for the Dutch economy over the next 12-24 months. In comparison, this percentage stood at 80% in the surveys conducted the previous two years.

The findings by the management consultancy come a few months after statistics released by the Dutch government showed that the economy is currently performing at its best level in the past ten years. In 2017 growth surpassed the barrier of 3% for the first time since the 2007 financial crisis. And projections for 2018 estimate growth of 2.5%, while other key economic indicators such as unemployment and inflation are also positive.

Heleen Wachters, co-head of Eden McCallum’s Benelux office, said, “It is perhaps not surprising that Dutch business is maintaining a positive outlook. The Eurozone is looking stronger, and while Brexit is a distraction that adds some uncertainty, the overall strength of the European economy is more significant.”

Asked about their outlook for the Eurozone and the global economy, Dutch executives were similarly more upbeat compared to previous years. In 2015, 50% were optimistic about the Eurozone outlook and 55% were optimistic about the global economy.  These percentages have risen to 77% and 68% respectively in the most recent results.

Benelux office co-head Marjon Wanders linked the flourishing sentiment in the Netherlands to the broader changes that took place in the political arena. Wanders contended, “Many business leaders are relieved that elections in the past year in France, Germany and the Netherlands did not lead to the landslide victories for far right (and anti-EU) political parties, which had been predicted in the polls in the months following Brexit. The fact that these parties have not been able to gain power is likely to have significantly bolstered confidence in the stability and outlook for the Eurozone”.

The United Kingdom

However, the picture in the UK is very different. While many businesses remain reluctant to discuss the 2017 general election, which saw the government lose its parliamentary majority in a humbling trip to the polls, this event undeniably contributed towards the decline in confidence among the business community that the best deal with the EU could be reached after Brexit was realised. With a significantly weakened bargaining position, the UK could face trade tariffs which would have major implications for businesses.

65% of UK businesses in Eden McCallum’s survey are somewhat pessimistic about the outlook for the next two years, while 17% are very pessimistic. These numbers are in stark contrast to even the second most pessimistic outlook in the survey, the Swiss – 9% of whose business leaders take a somewhat pessimistic view of the next two years in their own country. When the Swiss respondents considered the Eurozone more generally, this number increased to 17%, with a further 3% being very pessimistic. This was again surpassed by the UK, where 24% of British businesses are somewhat pessimistic about the Eurozone’s prospects, with another 2% being very pessimistic. In terms of the global economy meanwhile, all three nations remained relatively optimistic – although UK business leaders were most doubtful.

Dena McCallum, London-based co-founder of Eden McCallum, commented; “It is striking to see how much more positive Dutch businesses’ views are when compared with the quite intense gloom seen in the UK right now. A divide in Europe has truly opened up.”

Brexit

Brexit is, however, set to impact the Dutch business scene too. 67% of Dutch business leaders surveyed said it would be bad for the Dutch economy, while 75% thought it would be bad for the EU as a whole. Conversely, only 27% of Dutch firms believed that Brexit would harm their own company’s interests.

Due to the negative perception of Brexit, only 21% now think another EU member state will choose to copy Brexit – a year ago that figure was 59%. Fewer respondents now believe that Brexit is very likely to come to fruition over the next five years. While a majority of 53% of all Dutch respondents still think it will, and a further 25% believe it is somewhat likely, this is a fall from the figures of 59% and 25% in 2016, respectively. 12% meanwhile believe it is somewhat unlikely, a 3% increase from last year.

President Trump

In domestic terms, more than half (52%) of the respondents believe the impact of US President Donald Trump will be either ‘very bad’ or ‘bad’ for the Dutch economy, up from 44% the year previous. The trend mirrors the forecast for Trump’s impact on both the global (78%) and US economy (59%), suggesting a growing belief that Trump’s Presidency may have implications for the economy.

Over the past three years Dutch business has become more concerned about the US and less concerned about China as the source of a future global financial crisis. Concerns about the US have grown from 9% in 2015 to 40% in 2017; while the likelihood of China being the source of the next global financial crisis fell from 56% to 29% over the same period. 78% believe President Trump will be bad for the global economy, up from 65% a year ago.

Related: European CFOs more confident about economy and outlook.