Uncertain monetary policy and an increase in capital costs have become the main risk of business development – this is what 35% of European business leaders think, reveals the latest sentiment study of European business leaders “2023 EY European CEO Outlook Pulse”.
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The second most important risk is still associated with the pandemic – 32% of entrepreneurs are worried that restrictions related to Covid-19 could return, which would affect supply chains. The third most important development risk in the eyes of European businessmen is inflation and the related increase in production costs – 31% of company managers rank it among the risks.
30% of company managers mention growing geopolitical tension as a risk to their business growth, and they are equally worried about the increasingly strict environment of regulatory requirements in the main markets of the companies’ operations. Likewise, 30% of business managers also mention the “regionalization” of the world economy as a development risk, that is, the fragmentation of the global market into separate economic regions as opposed to interconnected economies dominated by free trade and capital movement.
“Taking into account the external risks, we see that the investment priority of European entrepreneurs is currently investing in strengthening the existing operations of their companies – this is indicated by 41% of company managers. These investments are aimed at strengthening various internal production and management functions, so that the company is in a better position for growth when when the European economy resumes more dynamic growth. The next investment priorities are currently investments in sustainability issues and the digital transformation of their operations – this is indicated by 39 and 37% of European business leaders, respectively. I think that Latvian entrepreneurs should also have similar priorities, that is, in a time of stagnant economy is suitable for strengthening the internal operations and processes of companies in order to prepare for a new competitive action,” says Guntars Krols, EY partner, head of the strategy and transaction consulting department in the Baltic countries.
Another 29% of business leaders see the lack of an adequate workforce as a risk to growth and are equally concerned about the impact of climate change and the pressure to strengthen the sustainability of their operations. On the other hand, 28% of company managers worry about cyber security risks in their development.
