Confidence among EU business leaders holds steady, while UK chief executives trail behind, according to a global survey.

Confidence among CEOs in the European Union (EU) remained stable in the last quarter of 2016. After reporting the highest confidence globally in the third quarter, the EU now trails Asia and the United States, the most confident region in the world, edging up to 60.9, its highest level since April 2016.

This according to the YPO Global Pulse Confidence Index, a quarterly electronic survey, conducted in the first two weeks of January 2017. The survey gathered answers from 1,514 chief executive officers across the globe, including 193 in the European Union.

While the overall picture in the EU remained unchanged, there were differing trends within its largest economies. Economic confidence in the United Kingdom slumped 4.5 points to 55.0, its lowest level since April 2013 following the decision to exit the EU. Germany also reported a gloomier outlook in the fourth quarter, slipping 2.8 points to 56.3, following slower-than-anticipated growth and ongoing political unrest in the country.

France reported more a positive outlook, moving up 2.9 points to 62.6, and Italy climbed 5.6 points to 61.3. Spain remained relatively unchanged at 67.1

“A low and durable level growth seems to be reality for the EU. It is, however, very encouraging to observe the persisting optimism coming from French chief executives even though they remain concerned by the results of the next presidential elections to take place in the first semester of 2017,” said Boris Derichebourg, President of Derichebourg Multiservices and a member of the YPO Paris Chapter.

Globally, the YPO Global Pulse Index for the fourth quarter of 2016 climbed by 3.0 points to 62.2, its highest level in two years. The United States reported the highest levels of economic confidence in the world, increasing by 4.2 points to 64.6, its highest level since January 2015. Asia gained 1.2 points to land at an optimistic 61.2. Elsewhere, confidence in Latin America increased by 2.4 points to 58.3, while confidence in the Middle East and North Africa jumped 5.6 points to 59.5. Africa reported a 0.8-point decline, landing at 54.7, making it the second-least confident region in the world after non-EU Europe, where confidence increased 2.5 points to 54.3.

Herr are some of the key findings for the region, according to the study.

Chief executives remain bullish about the year ahead

EU business leaders remained optimistic about the prospects for their own organisations over the next 12 months. Regionally, the survey’s key indicators, sales, hiring and fixed investment, indicated a positive outlook. The YPO Sales Index showed that nearly two-thirds of EU participants (61 per cent) expected to increase revenue in 2017, compared with only 6 per cent who predicted a decline in sales. Similarly, the YPO Employment Index showed that 36 per cent expected to increase headcount in the year ahead, versus 6 per cent who predicted a decrease in the size of their workforce. The YPO Fixed Investment Index found that 46 per cent expected to increase fixed investment, against 7 per cent who predicted a decline.

Regarding the overall economic and business climate, 40 per cent of EU chief executives believed that conditions would improve in the first half of 2017, while 47 per cent felt that there would be little or no change. Only 13 per cent expected the economic landscape to deteriorate over the next six months.

Confidence slumps in the United Kingdom

UK business leaders reported a much gloomier outlook in the fourth quarter of 2016, hitting its lowest level since April 2013. At 55.0, confidence is now lower than it was in the immediate aftermath of the Brexit referendum vote, when confidence slumped to 57.9 in July 2016. Although confidence bounced back in the third quarter, climbing to 59.5, the short-term effects of Brexit seem to have impacted sentiment, with a weakening pound and ongoing uncertainty surrounding Britain’s economic future outside of the EU, and possibly the European Single Market.

When asked to assess whether business and economic conditions would improve in the first half of 2017, only 20 per cent of YPO chief executives in the Uk expected conditions to become more favourable, and 19 per cent expected to see a deterioration, while the majority predicted that the economic climate would remain relatively unchanged.

When assessing the prospects of their own organisations in 2017, UK chief executives were far more cautious than in the previous quarter.

Half predicted that they would increase sales in the next 12 months, versus 63 per cent in the third quarter. More than one-fourth of business leaders expected to increase staff headcount, against 39 per cent in the previous quarter. Only 25 per cent predicted that they would increase fixed investment in the coming year, compared to 46 per cent in the previous survey.

The business network has a reach of over 24,000 members in more than 130 countries, and in total, YPO member-run companies employ more than 15 million people and generate $6 trillion in annual revenues, making its quarterly insights on how business leaders react to global changes and plan ahead crucial for the wider economy.