Support for euro remains strong, but French and German business leaders sceptical about further integration
On the eve of this week’s European Parliament elections, new research from Grant Thornton reveals that despite the economic problems caused by the sovereign debt crisis, support for the euro amongst business leaders remains strong. However, support for further European integration appears to be waning in France and Germany, the architects of the EU project. With right-wing, anti-EU parties set to make significant gains in the European Parliament, a decline in business support represents a challenge to hopes for a more united Europe following the sovereign debt crisis.
The findings, drawn from Grant Thornton’s annual Future of Europe report, show that 93% of businesses in the eurozone area want to see the euro survive and three in four (75%) say that entry into the single currency has benefited their organisation. Business optimism has also risen across the eurozone from 8% to 25% over the past three months.
However, when asked whether they would like to see further integration between member states, businesses in France and Germany were markedly less positive compared with this time last year: in Germany, 55% of firms are now open to further economic integration, down 20 percentage points from this time last year; in France, support has dropped 12 percentage points to 57%.
Similarly, support for further political integration in Germany has fallen from 61% in 2013 to 53% this year, and in France from 35% to just 22%. The proportion of business leaders in France and Germany who do not want to see any further European integration have risen by 9 and 12 percentage points respectively.
Scott Barnes, CEO of Grant Thornton UK LLP, commented: “France and Germany have historically been the driving forces behind the EU project and together they account for nearly half of eurozone GDP. Despite vastly different economic performances since the financial crisis, they are now united behind an increased loss of faith in further integration. The cooling of support may be symptomatic of the toll of the support they provided to the eurozone through the sovereign debt crisis."
The IBR also reveals that while business support for further EU integration has wobbled in France and Germany, it is picking up elsewhere. Support for greater economic integration is increasing in a number of economies including Ireland (50% last year to 77% this year), Poland (54% to 67%) and Italy (56% to 61%). In Ireland, 95% of businesses are now open to further integration, up from 68% this time last year.
In the UK however, attitudes are somewhat different. The majority (57%) of British business leaders say that they do not want to see any further European integration – comfortably the highest level of opposition across any European economy (the next highest is Netherlands on 26%). The proportion of British businesses who say they want to see the euro expand is 17%, an increase on last year but again this is much lower than most other European countries.
Scott Barnes added: “I wouldn’t say that the UK figures equate to an ‘anti-Europe stance, but they certainly show a much greater reticence to closer ties than the rest of our European neighbours. It will be interesting to see what sort of influence the business voice has over the UK Government’s efforts to renegotiate the terms of its EU membership.
“More broadly, there’s no doubt that the picture across Europe is much brighter now than it was twelve months ago. But the recovery is a fragile one – Europe is not out of the woods just yet. Deflation is a growing concern, as is the plight of youth unemployment which is still unacceptably high. The situation in the Ukraine is also creating uncertainty. A loss of enthusiasm over the euro project from French and German business leaders could have a crippling impact on the recovery across the region, and derail the forward progress we've seen as of late.
“With EU reform high on the agenda for policymakers, it is vital they listen to the views and concerns of businesses and work together to secure a prosperous future for Europe.”
- ends -
Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of more than 12,500 businesses per year across 45 economies. This unique survey draws upon 22 years of trend data for most European participants and 11 years for many non-European economies.
Data collection is managed by Grant Thornton's core research partner – Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with more than 3,100 chief executive officers, managing directors, chairmen or other senior executives from all industry sectors conducted in November 2013 and February 2014.