Grant Thornton predict strong profits ahead for EU businesses - Press Release

• selling prices - highest expectations in survey's 15-year history
• turnover expectations - highest for six years
• disagreement over whether EU expansion should continue.

The latest findings from the Grant Thornton International Business Report (IBR) show that 40% of European Union (EU) businesses expect higher profits in the year ahead. The percentage of businesses expecting higher selling prices in the next 12 months (35%) is higher than has ever been recorded in the 15-year history of the survey, pointing to concerns over increasing inflationary pressures within the EU.

59% of EU businesses expect increases in turnover, and 25% expect exports to increase in 2007 - the highest figures for six years.

Alex MacBeath, global leader of privately held business services for Grant Thornton International commented: “2007 is proving to be a good year for Europe’s economy. Germany’s resurgence appears to not only be lifting its domestic economy but also improving the prospects for trade within the whole of the EU. However, the rise in selling price expectations is concerning, and the increasing threat of inflation will need to be controlled by targeted monetary policy.”

EU enlargement

 
When questioned on the impact of EU enlargement, businesses pointed to increasing amounts of regulation as the greatest impact, with 52% of respondents saying they had already experienced this. Most affected, in terms of increased regulations, are businesses in Poland (70%), followed by Germany (67%). In contrast, the reported effect of enlargement on foreign investment into domestic economies has fallen to 17% compared to 30% two years ago.

Continued enlargement?

 
Opinions vary significantly on whether countries believe that EU expansion should continue or not.

Most positive was Poland (89%), where the benefits of enlargement have been significant. In comparison, businesses in the UK are at odds with government policy on EU expansion with only 45% in favour of the idea.

José María Fernández, managing partner of the Grant Thornton member firm in Spain noted: “It is interesting to note that businesses in Spain are most supportive for continued EU enlargement among the larger and more established member states. This is a reflection of the success of the EU and how Spanish businesses have developed by being part of the community. This positive attitude is shared by a large majority of the Spanish population who agree that the continued expansion of the union is not only good for potential, but also existing member states.”

European business data

 
The International Business Report offers the most in-depth and continuous insight into the attitude of business owners across Europe since the creation of the European Single Market in 1992 and provides 15-years of trend data allowing a comparison of the relationship between the economic environment and expectations of turnover, profits, employment and investment. Over the past fifteen years the responses regarding business turnover in the year ahead have been a good indicator of actual growth achieved.

Ends

Notes to editors

Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in 1992 called the European Business Survey (EBS). In 2003 the research project was widened to an international perspective covering medium-sized businesses and renamed the International Business Owners Survey (IBOS).

In 2007, the survey’s name was changed from IBOS to the International Business Report (IBR). The IBR survey draws upon 15 years of trend data for original EBS participants and 5 years for original IBOS countries. 15 year trend data is available for: France, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Spain, Sweden, Turkey and the UK, while 5 year trend data is available for Australia, Canada, Hong Kong, India, Japan, Mexico, Singapore, South Africa and the US.

Grant Thornton International will donate US$5 to UNICEF for every completed IBR questionnaire. In 2007 this will result in a donation of over US$35,000.

The research was conducted by Experian Business Strategies Limited and Harris Interactive. All figures were correct at time of going to press.

About Grant Thornton International

Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist business advice to privately held businesses and public interest entities. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business.

Grant Thornton International is a non-practising international umbrella organisation and does not deliver services in its own name or otherwise. Each member and correspondent firm in Grant Thornton International is a separate national firm. These firms are not members of one international partnership or otherwise legal partners with each other (with the exception of certain limited instances), nor is any one firm responsible for the services or activities of any other.

For further information please contact:

Paul Donlon, Catherine Huffer, or Katherine Sladden
Grant Thornton International press office.
T +44 (0)870 444 4568 / 07970 029 650
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Neil Bird
IBR project manager
Grant Thornton International
T +44 (0)20 7391 9516