For Eurozone execs, the need to transform outweighs the risks of uncertainty, so the drumbeat of M&A continues.
According to the latest edition of the EY Global Capital Confidence Barometer, Eurozone companies face a range of geopolitical, regulatory, trade and tariff challenges and are choosing a more proactive response. With the need to transform increasingly outweighing the risks of uncertainty, executives continue to see dealmaking as a powerful means to reshape portfolios and accelerate the transformation imperative.
Eurozone companies express concern about economic growth and a near- to mid-term slowdown
Although two-thirds (65%) of Eurozone executives still remain positive about global economic growth, this is down almost 20 percentage points from October 2018, and 11 percentage points lower than the perspective of their global peers. Of equal interest, more than one in five (21%) express concern that the global economy is actually declining, versus 12% of global respondents.
Sentiment is positive across the Eurozone as a whole, with 70% of Eurozone executives indicating that they see their economy as growing, up slightly from a year ago. However, if we drill down to a country level, things are less rosy than they seem. Germany and Spain are the most pessimistic, with 20% of respondents in each country expecting their local economy to decline, a significant increase from six months ago, and four percentage points higher than the Eurozone average. French executives are feeling slightly more positive than the Eurozone average, with 13% seeing a decline in the economy, while 13% expect things to remain stable. Interestingly, Italy is the most optimistic of the Eurozone countries, with only 8% expecting their economy to decline, while 25% expect it to remain stable.
Meanwhile, across the Eurozone, concerns about an economic slowdown are on the rise. More than three-quarters (76%) of Eurozone executives (versus only 46% of global executives) expect an economic slowdown in the near to mid term. Twenty-five percent expect this to happen within the next year, versus 34% of global executives. A significantly larger percentage (60% versus 45% of global executives) expect a slowdown to occur in 2021.