Senior Execs less optimistic about Global Economy

A slight majority of senior company executives in the UK are confident that worldwide economic conditions 'will improve' in the coming year, but they are less optimistic than they were in the first quarter of 2002, and UK executives showed the biggest fall in optimism out of all the countries surveyed. The results come from new global research by Taylor Nelson Sofres (TNS), working in association with Deloitte Consulting.

The research, which questions 600 CEOs, CFOs, COOs, CIOs and Heads of Strategy from leading companies in Asia Pacific, Europe and North America, found that 52 per cent of senior executives in the UK believe global economic conditions will improve in the next 12 months, compared to 69% in Quarter 1 and a global average for Quarter 2 of 61%. In the UK, only 13 per cent predicted that the economic situation would actually worsen within the year.

Senior executives in Belgium showed the biggest increase in confidence between Q1 and Q2, increasing from 66 per cent of executives to 85 per cent in Q2.

The most bullish sector was Financial Services. Seventy-one per cent of respondents in this sector said that economic conditions will improve in the coming year, compared to only 58 per cent of executives working in Travel and Transport or Wholesale. Executives working in Heavy Industry showed the largest drop in optimism over the last quarter (a decrease of 27 percentage points).

CIOs (Information) are more positive about the economic outlook than other executives surveyed, with almost three-quarters (72 per cent) stating that global economic conditions will improve over the next twelve months, compared to just 54 per cent of CFOs (Financial) and 47 per cent of COOs (Operations).

According to Gilbert Toppin, Deloitte Consulting European Operations Director, 'Overall there has been a clear fall in the proportion of executives expecting global economic conditions to improve. However, the majority remains confident that conditions will get better. In the US, Europe and Asia Pacific, close to 60 per cent of executives still expect economic conditions to improve. Interest rates remain very low by historical standards throughout Europe and especially in the US and Japan. Fiscal policy is likely to become more expansionary in the UK and the US. The policy stance of monetary and fiscal authorities throughout the developed world is likely to help boost growth which has been beneath trend in much of the developed world over the past year.

'In light of all this, a general belief that conditions will improve is not surprising. Whether that belief can survive further sell-offs in stock markets remains to be seen...'

David Racadio, Director TNS Professional Services said: 'During recent months, markets around the world have been hit hard by large corporate failures and related concerns over the reliability of audited accounts. Senior executives within the UK have responded to this news with more caution than most... However, market declines seem to be overstated as nearly two thirds of senior directors on a global level from the world's largest companies maintain that they expect the economy to improve in the coming year. Since the views of these top directors are influential in driving economic growth, this quarterly research, the first of its kind to be conducted on a global basis, could be seen as an early indicator of how the economy will perform.'

The Global Economic Confidence Barometer (GECB) measures the optimism of people who drive the global economy, (CEOs, CFOs, COOs, CIOs and Heads of Strategy) from the world's largest companies. It is conducted quarterly by TNS Professional Services in association with Deloitte Consulting. Executives from the following countries/regions were questioned: Australia, Belgium, Canada, China/Korea/Hong Kong, France, Germany, Italy, Japan, the Netherlands, the Nordic Region, Spain, Switzerland, UK, USA.

For further info contact mica.quinn@tnsofres.com

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.