Business executives in North America and Europe are not as darkly pessimistic about the global economy as they were a few months ago, according to a survey, but their peers in emerging market regions are almost as gloomy as before.
The latest FT/Economist Global Business Barometer, a survey of more than 1,500 senior executives, found business confidence improved between October and January, as the US economy strengthened and the strains in Europe’s banking system eased.
In January, about 41 and 43 per cent of respondents from North America and western Europe respectively expected the global economy to worsen over the next six months, while 20 and 15 per cent respectively expected it to improve. In contrast, in October’s survey about 46 and 58 per cent of respondents from the two regions expected tougher times ahead and just 14 and 11 per cent respectively expected conditions to improve.
Business executives in Latin America and Asia-Pacific, though, seemed less impressed by the tentative signs of improvement in the global economy. Indeed, they were gloomier in January about global prospects than their peers in developed regions, though still confident about the prospects for their own companies.
Separately, only 23 per cent of respondents said their companies had made contingency plans in case the eurozone broke up, even though 73 per cent said this scenario would have either a “somewhat” or “very” significant impact on their business. Companies in western Europe appeared no more prepared than companies in other regions.
However, there was a much bigger divergence by size: 44 per cent of executives at companies with revenue of more than $5bn said they had put contingency plans in place, compared with just 14 per cent of companies with revenue of less than $500m. Large companies are much more likely to span several countries and deal in multiple currencies.
Respondents were also asked about the European Union’s proposal for a financial transactions tax: 55 per cent expected the tax to go ahead and 22 per cent said it would prompt their companies to reduce investment in the region. Energy companies and financial services companies were the most aggressive, with about a third of respondents from both sectors saying they would reduce their investment if the tax went ahead.
Meanwhile, more than a third of respondents said companies should be forced to publish the ratio of the highest paid worker to the lowest, though only a fifth of respondents in North America were in favour of the idea. People at the top were also cooler on the proposal: 29 per cent of C-suite executives said they agreed with the idea compared with 40 per cent of executives lower down the pay scale.
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