The report states that “they expect revenue growth of 2.1 percent on average in the coming year, with about one in five companies—especially larger, more internationally focused ones—predicting revenue growth above 5 percent. Business leaders are also upbeat about some key global trends affecting business everywhere, including digitization and the rise of emerging economies.”
McKinsey surveyed 400 US and Chinese companies with operations in Europe, and found that their expectations for GDP growth in the European Union were even higher than those of their European counterparts on average—almost 3 percent and 2.3 percent, respectively.
Reluctance to invest
“Gross corporate savings rose to almost €2 trillion in 2015, and companies are divided between those saying they are saving to fund future investments (48 percent) and those building reserves for future crises (47 percent). Yet most businesses believe they already invest at the right level and see sufficient opportunity to invest more; weak demand, lack of opportunities, and access to finance no longer feature highly as barriers to investment.”
“European business leaders cite a range of risks and uncertainties, including concern about future crises, nervousness about rising populism and anti-globalization sentiment, and lingering fears about the future shape and direction of the European Union (EU) itself.”
Positive feedback for the EU
“Just over half the companies surveyed think the EU has had a beneficial effect on their business, and the most successful companies are the most positive. Moreover, some 60 percent of business respondents say they want “more Europe,” in the form of greater policy convergence and integration.
The answers nonetheless highlight a gap between the future EU that business wants and the scenarios it expects. Almost 85 percent of surveyed companies say they think the EU will remain intact, and just under half anticipate that the status quo will prevail or that greater integration will take place. However, 51 percent expect the eurozone to shrink or disband in the years ahead.”
“Concerning Britain’s decision to leave the EU, one in three respondents said a decision by any other countries to follow suit would be negative for their business.
Stronger productive investment will be critical to ensuring that Europe’s economic recovery remains on track. We have calculated that restoring investment to its level before the 2008 financial crisis could boost EU GDP by as much as €1 trillion. Our survey suggests that, to achieve that potential, the EU will need to address lingering areas of fragility, including remaining financial risk, regulatory uncertainty, the direction of the eurozone, and where possible, geopolitical concerns such as migration and the integration of refugees, as well as populism. It could also help companies harness digitization, enabling the EU to achieve more of its digital potential.
One way to bolster confidence would be to develop a new narrative about the European Union’s role and vision for the future that shows that the forces in favor of cooperation are stronger than those opposing it.”