Global business confidence is at a four year high, with the majority of businesses predicting growth in turnover and staff in the next twelve months, according to research published today by The Sage Group Plc. The annual Sage Business Index surveys close to 14,000 small and medium sized businesses in 18 countries around the world.
For the first time in four years businesses around the world are more optimistic than pessimistic, with scores rising above 50 across all three areas surveyed: their own prospects; their national economies; and the global economy.
Businesses’ confidence in their own prospects has risen from 62.01 in 2013 to 64.14 in 2014, the highest it has been in four years. Confidence in their national economies has risen 2.78 points to 51.63, while businesses also have greater confidence in the global economy, with confidence rising three points in the last twelve months to 51.68.
In Europe, countries are split over the prospects for the European economy. Businesses in Ireland and Spain are most confident scoring 56.40 and 54.14 respectively, while the UK, Germany and Poland are all more optimistic than pessimistic. However, in Austria, Switzerland and Portugal the reverse is true, with all countries scoring below 50. France is the most pessimistic about the European economy of all nations surveyed, scoring just 44.08.
Predictions for growth
The global rise in confidence is apparent in businesses’ predictions for the year ahead. The majority of businesses (58%) anticipate their turnover will grow by an average of 2.5% in the next year, while 43% say the number of people their business employs will increase in the same time period.
Attitudes to risk
The shift in confidence has also seen businesses more open to risk as nearly half (49%) of business decision makers described themselves as risk-seekers, up 2% from last year. However, nearly a third of businesses (35 %) said that they have become more risk averse over the last seven years.
Among the most confident, were those businesses operating beyond their domestic market. Over a third (41%) of businesses surveyed say they do business in countries outside their own, stating that exports account for 20% of their turnover on average. Indeed, exporters say the last year has been a good one with 40% seeing their level of exports increase and just 11% saying they have fallen. Furthermore, over half of those companies (54%) expect export turnover to increase by approximately 3.2% in the next year.
However, many businesses do not feel they are supported in their ambitions to grow their exports. Just 12% say they receive the support they need from government, citing the logistical costs (30%) and the level of competition in international markets (25%) as the two biggest barriers to exporting. Nearly a third of businesses (29%) believe the one thing government should do to help them grow exports is to provide greater financial incentives.
Sage Group CEO Guy Berruyer, said: “Confidence has been on the rise for some time but we appear to have reached a global tipping point where for the first time businesses are optimistic about the prospects for their business, their national economy and the global economy. This is underlined by their business predictions for the year ahead. However, more must be done to support businesses with ambitions to grow their exports – a key factor in the continued growth of the global economy.”
Barriers to growth
Domestically, decision-makers felt the greatest challenge for growing businesses to overcome was the level of government bureaucracy and legislation, with 23% saying it is an obstacle. Tax rates and tax relief were seen as a hindrance by 16% while nearly a quarter (23%) of businesses believe that the most important thing their government could do to help businesses is reduce business bureaucracy and over a fifth (21%) called for a reduction in business tax.
SUMMARY OF GLOBAL STATISTICS
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