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International Business Report

Europe – a region in resurgence

European businesses have a spring in their step. Data from our International Business Report (IBR) finds that business optimism across the EU sits at net 60% in the first quarter of 2018. This is the highest optimism figure recorded in Europe in over a decade of IBR research.

German and Dutch businesses remain extremely optimistic. There are also welcome increases in France and the UK. But, critically, confidence is now broad-based across the region.

Business optimism in Southern Europe has struggled since the financial crisis. Today, though, Italian optimism is up by 6 percentage points in the first quarter. In Spain it is up 17 percentage points and Greek businesses are in net positive territory for the first time in three years.

This palpable sense of confidence is evident in expectations and activity. Net 57% of EU firms expect revenues to increase in the following 12 months. This is another record high. Plans to boost investment in new buildings, plant & machinery and research & development are also up.

This bright outlook comes against an ever-shifting backdrop of powerful forces. But businesses leaders are keeping these factors in perspective. Concerns about the rise of populism and nationalist political parties have not dented overall sentiment. Likewise, leaders do not view Brexit as a major worry.

Europe is experiencing a resurgence of optimism. But will it last? History tells us that growth tends to come in cycles and there may be change afoot. Eurozone GDP growth slowed to 0.4% in the first quarter of 2018, down from 0.7% the previous quarter.

In this series of articles we explore how businesses feel about Europe’s political future. We also look at how European firms plan to capitalise on the potential for technology to disrupt markets and offer growth opportunities. And, with Grant Thornton’s European leaders meeting in Stockholm this month, you’ll find a snapshot of how businesses in the Nordic region are using collaboration as a foundation for success.

The challenge for businesses will be navigating political, social and technological challenges, while also making the most of the current economic stability to invest in future growth. Businesses who manage this successfully will be best placed to succeed if and when economic conditions change.