European Private Business Survey 2018

How private businesses want to realise their growth ambitions

Private businesses are particularly confident that they can grow their companies in their domestic markets by focusing on their customers and embracing digital technologies.

Yet the majority is underestimating its disruptive force as well as the risks associated with digital: Only 19% see cyber as a looming risk. For staying a step ahead of their competitors they need to have the right infrastructure and skills, but especially skills are short in European economies.

Skills shortage and regulation limit entrepreneurs’ growth potential

Skills shortage

Skill shortages are holding the entire European economy back, causing a massive €324 billion annually in lost revenues just from private businesses. That’s around the annual economic output of Portugal, Hungary and Croatia. Talent scarcity comes at a time when youth unemployment is still high in Southern Europe and economies are faced with immigrants from non-EU countries. Effectively, the employment market is tightening at a time when private businesses are wanting to invest more and recruit more qualified staff to grow their businesses.

Regulations

Private businesses often see themselves at the sharp end of regulations and bureaucracy as they don’t have the wherewithal to influence governments as big business can. 39% see domestic regulation as a major threat to their business, while only 29% are upset about regulation and bureaucracy from the EU. That sentiment was particularly pronounced in countries such as Croatia, Greece, Finland, and Hungary. Also in Italy, where anti-establishment, euro-sceptic parties have very recently scored electoral success, as many as 49% of respondents felt domestic bureaucracy was a problem, compared with 20% singling out EU red tape. Even in the UK private businesses felt domestic bureaucracy and regulation were more of a threat to their businesses than EU bureaucracy and regulation, i.e. almost 35% of respondents cited British red tape as a concern, compared with 25% pointing the finger at EU red tape.

Too vague to be worried

Brexit is less than a year away and many private businesses are uncertain about how it will affect them. Over a quarter of private businesses expect Brexit to bring negative impact on their businesses in the future, but mostly don’t have a view on it. They would like to wait and see the outcome of the negotiations before making any judgements, but this might not be a good strategy given the importance of close trade relations with the UK.

Interestingly private businesses in some countries see Brexit as an opportunity, such as Turkey: Given Turkey is outside of the European Union some businesses there perceive Brexit as a chance to forge new relationships with British companies.