Only 36 percent of European senior executives say the E.U. economy is currently growing, and a like number is optimistic about its prospects for the next 12 months, according to the PricewaterhouseCoopers Management Barometer.

However, despite the executives' gloomy outlook for Europe, 66 percent said that the world economy is now growing, up from 39 per cent the previous quarter, and the same percentage is optimistic about the global economy for the next 12 months.

In third quarter interviewing, senior executives in Europe said:

  • Average estimated revenue growth for their company was 4.1 percent for the next 12 months, down from 4.6 percent in the previous quarter.
  • Plans for major new capital investments remain unchanged.
  • The workforce at their company will continue to contract.

In the US, 73 percent of senior executives said they are upbeat about prospects for their own economy in the next 12 months, while only 46 percent are optimistic about the world economy's prospects. ( )
"The survey findings suggest top executives in both Europe and the U.S. see recovery taking place first in the U.S.," said Gerald Ward, PricewaterhouseCoopers' global leader for Assurance. "And, the Europeans appear to be looking to the U.S. as the prime growth engine for an improving worldwide economy."

Only 38 percent of European executives are concerned about weak market demand as a potential barrier to growth over the next 12 months, a substantial drop from 50 percent in the prior quarter, and slightly fewer than the 44 percent reported by U.S. executives.

Other major concerns:

  • 36 percent in Europe and 33 per cent in the U.S. expressed concern about legislative and regulatory pressures.
  • 32 percent in Europe, versus 35 per cent in the U.S., are worried about competition from foreign markets.
  • 29 percent in Europe and 22 per cent in the U.S. are concerned about monetary exchange rates.
  • 27 percent in Europe and 28 per cent in the U.S. are concerned about decreasing profitability.

"An easing of concerns about market demand is an important early indicator that better times are coming," Ward said. "It is striking to see the degree of agreement on both sides of the Atlantic about these potential roadblocks to growth."
Over the next 12 months, European executives expect revenue growth averaging 4.1 percent, down slightly from the 4.6 percent estimated in the prior quarter. U.S. executives are targeting growth of 7.2 percent over the next 12 months.

Currently, 41 percent of European multinationals are planning major new capital investments in the year ahead, unchanged from the prior quarter, with average spending expected at 8.3 percent of revenues. In the U.S., 44 percent plan major new investments, at 7.5 percent of revenues.

Among areas cited for increased spending by European executives were: new product or service introductions, 36 percent; information technology; 36 percent; geographic expansion, 29 percent; business acquisitions, 29 percent; marketing and sales promotion, 25 percent; advertising, 16 percent; and R&D, nine percent.

"Executives in Europe are cutting their revenue projections slightly, while those in the U.S. are holding steady. This suggests a sense of weaker market demand in Europe," Ward said.

An average workforce loss of 1.6 percent, unchanged from the prior quarter, is anticipated in Europe over the next 12 months, compared to flat, 0.3 percent hiring growth for those headquartered in the U.S. Workforce expansion is planned by only 15 percent of surveyed European executives, while 41 percent expect to downsize staff. The rest foresee little or no change. In the U.S., a much larger number, 42 percent, is expecting to hire, with only 24 percent planning a net reduction.

"Europe-based businesses, like their U.S.-based counterparts, have been relentlessly restructuring to reduce labor costs and improve productivity," said Ward. "Although a 'jobless recovery' is a possibility for American businesses, it appears that most Europeans are firmly entrenched in negative job growth."

PricewaterhouseCoopers' Management Barometer is a quarterly survey of top executives in large, multinational businesses spanning technology, financial services, and consumer and industrial products and services. It is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. These findings are from third quarter interviews with 138 CFOs and Managing Directors of Europe- based multinationals, compared to 177 of their peers headquartered in the US. Questions about Management Barometer should be directed to Pete Collins, survey director and publisher, at 646-394-4496 or For more information about Barometer surveys, including recent economic trend data and topical issues, is available at

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