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UK CEOs remain amongst the most confident in the European Union (EU) and more optimistic than their counterparts in Germany, France, Italy and Spain, although the EU as a whole also saw a significant rebound in confidence over the fourth quarter of 2012. This is according to the latest YPO Global Pulse survey, the only CEO economic sentiment indicator to span the globe on a quarterly basis.
Almost 72% CEOs surveyed in the UK expected their organisations to increase revenues over the next 12 months, compared to 50% of the overall EU sample. Moreover, 40% surveyed business leaders in the UK planned to increase staff headcount in 2013, compared with 24% in the EU sample.
The YPO Global Pulse Confidence Index for the UK climbed 5.6 points to 62.7 in the final quarter of 2012, marking its second consecutive quarter of increases. The results suggest that recent efforts by the EU and national governments to protect the euro and address the fiscal crisis facing periphery economies are being perceived positively by the business community in the United Kingdom and around the continent.
The survey results were announced today by YPO (Young Presidents’ Organization), a not-for-profit global network of 20,000 CEOs.
The YPO Global Pulse Confidence Index combines CEO answers about expected and most-recent-quarter sales, employee numbers, fixed investment and business conditions.
The index is centred on 50. An index reading below 50 indicates a negative outlook–the lower the number, the more negative the outlook. A reading above 50 indicates a positive outlook – the higher the number, the more positive the outlook.
Marginal improvements to economy
There are some signs that UK CEOs believe that the economy is on the road to recovery. Thirty% CEOs felt that economic and business conditions had improved over the past 6 months than those that believed that they have deteriorated (24%). This contrasts with the third quarter of 2012, when more CEOs said that the economic climate had deteriorated over the previous six months (33%) than those that said that conditions had improved (27%).
Thirty-five% CEOs expected economic and business conditions to improve over the next 6 months, compared with only 9% CEOs who predicted that conditions would worsen.
Small businesses most optimistic
The findings revealed that in general, CEOs of small businesses (less than 100 employees) are more optimistic than those of larger ones. Among small companies, 85% CEOs expected to grow revenues over the next 12 months, compared with 63% of medium-size companies (100-500 employees) and 60% of large organisations (over 500 employees).
CEOs in small businesses also expected to add more workers over the next year. More than half (53%) expected to grow headcount over that period, compared with 41% in mid-size companies and 21% in large organisations.
Confidence increases across euro zone
EU CEOs are more optimistic about the economy and the short-term prospects for organisations than at any time since July 2011 and the heightening of the euro-zone crisis.
The YPO Global Pulse Confidence Index for the EU rallied 4 points to 55.4 in the fourth quarter of 2012, on the back of upturns in optimism within all of the major EU economies. Germany rose 3.9 points to 56.9 and France jumped 9.1 points to 53.3, its highest level since October 2011. Spirits even lifted in peripheral economies, with Spain climbing 5.4 points to 53.7, Italy edging up 2.1 points to 52.2, and Greece swelling to the neutral point on the scale (50.2) after wallowing in pessimistic territory for more than three years.
“The results give cause for encouragement, although after the recent GDP figures for the fourth quarter of 2012, we shouldn’t kid ourselves that the economy is out of the woods yet,” said Bhanu Choudhrie, executive director of C&C Alpha Group, member of the YPO London-Mayfair Chapter. “Nonetheless, I’m pleased to see that leaders within smaller businesses are optimistic about the next 12 months as that will be the key to economic growth and much needed job creation,” he added.
Global results
After two consecutive quarters of decline, the YPO Global Pulse Confidence Index rallied to 61.3 in January 2013, up 2.3 points from its October level. Of the nine regions of the world, four landed above the global composite index: Africa (67.6), Asia (64.3), non-EU Europe (62.1) and Latin America (63.5). The West Asia and North Africa region fell for the third consecutive quarter, to 58.4. Confidence remained lowest in the European Union, even after climbing 4 points to 55.4. Non-EU Europe recovered the most ground in the latest survey, surging 6.5 points. The US index rose a modest 1.9 points to 61.0. The Asia index rose 4.3 points, its largest quarter-over-quarter increase in more than three years.
