European CFOs more confident about economy and outlook

06 December 2017 5 min. read
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European companies are upbeat, with economic growth optimism up and uncertainty diminishing. Meanwhile,talent scarcity is likely to increase across Europe as hiring intensifies, potentially creating negative pressure on the UK, which is on course to become more isolated from a post-Brexit crack-down on free movement.

The financial crisis brought acute uncertainty to Europe, having resulted in the nationalisation of considerable financial institution debt and the bailout of various countries across the region. EU growth was consequently anaemic in the years following the crisis, with harsher regulations implemented to stave off recession, while interest rates remain at near record lows.

While uncertainties remain with Brexit negotiations looming large, GDP growth in Europe has picked up – with regional economies finally enjoying more stable economic conditions and growth rates. According to a survey by Deloitte among over 1,500 CFOs across 19 European countries, confidence is on the rise, but the region still faces significant challenges almost one decade on from the recession of 2008.

Financial prospects

The research notes that company outlooks in most regions have brightened compared to the last three months. Firms are particularly positive in the Eurozone, where those more optimistic stand at 46% of respondents, with 8% less optimistic – a 13-point increase on balance compared to Q1 2017. While across the currently 28 member states, a new 32% more optimistic presides – up 7 percentage points.

In terms of member states with the most net positive improvement, France – following the win of pro-business Macron in parliamentary elections – is up a net 54 percentage points, with optimism running at 78% of respondents. Greece, too, is increasingly optimistic, following its recent successful return to the bond market. Other big increases were noted in Finland and Portugal.

Not every country saw a net increase however, with the Netherlands noting a decrease of -34 percentage points as the recent coalition agreement outcome continues to sink in. The UK meanwhile, hit with continued uncertainty around Brexit and a slowdown in growth, has seen optimism fall by 14 percentage points to a net 0% - the lowest net result for all regions.


While expected growth levels are up, uncertainty remains acute among all respondents – although it is increasingly chronic in the UK, where uncertainty remains unchanged on ‘high’ among 85% of respondents. Respondents in Greece too remain uncertain, at 44% of respondents, a 7 percentage point decrease on the previous year. German respondents, the report notes, are in a state of high uncertainty.

Austrian and Polish respondents, meanwhile, are the most positive, at 40% and 27% of respondents respectively citing low-uncertainty. Other regions with relatively low uncertainty increase Denmark, Italy and Estonia. Overall across the Eurozone, net-high uncertainty stands at 40%, with net-high uncertainty across the Europe as a whole at 44%.

Revenue and margin by country

Over the coming 12 months, Belgium, Sweden and Finland have above average expectations for revenues and margins, along with the Netherlands. Italy has a positive outlook on margins, but is slightly below average on revenues. Most countries are relatively positive on revenues meanwhile, while slightly below the line on margins.

The UK meanwhile is far below the average on margins, while also suffering on revenues. The CFOs in the UK remain particularly concerned about a weakness in the competitiveness of the national economy. Denmark too, is found to have a relatively weak revenue outlook, although margins remain more positive – as demand declines.

Revenue and margins by industry

The research also identified which segments of the European economy are likely to see positive change to their revenues/margins over the next 12 months. Manufacturing leads positive sentiment, largely due to improvement in efficiency placing downward pressures on costs. The life sciences, too, are projected to see positive growth in both revenues and margins.

Technology, media & telecommunications are positive on their margins, even while revenue growth is projected to be subdued. Construction sentiment rests in an average position, while business & professional services are positive about margins and relatively even around revenue growth. Energy, utilities & mining continue to note underwhelming expectations around margins and revenues.

Number of employees

Hiring increase

Demand for employees is set to increase across most countries in Europe, with a net balance of 19% saying there will be an increase over the coming 12 months. Belgium leads the charge, at net 63% of firms expecting an increase, followed by Poland at a net 45%. France and Ireland are also relatively positive, with net 38% and 37% respectively.

Not all regions are positive however, with 26% of UK respondents saying there will be a decrease – although the number is up two percentage points on the previous survey in Q1 2017. Greece notes the highest total increase, up 18 percentage points to a net 35% increase.