EU business leaders’ confidence in the economic outlook for Europe sharply dropped in the second half of this year, an influential survey found on Thursday (28 November), amid fears that global trade tensions could further damage Europe’s anaemic economy.

The European Round Table for Industry (ERT) reported that a key gauge of business sentiment fell from 58 to 47 from the first to the second half of this year – below the 50-mark separating overall optimism from pessimism.

CEOs overwhelmingly agreed that accelerating economic and political fragmentation poses a major geopolitical threat to their businesses, with 84% regarding it as one of the top three dangers and 55% deeming it the main risk.

Most notably, just 9% of chief executives supported the use of tariffs to protect European industry from China’s increasingly competitive manufacturers, while 4% endorsed the use of subsidies.

“[CEOs] want open functioning markets,” Maria Demertzis, a senior analyst at the think-tank that developed the confidence measure used in the study, Conference Board Europe,  told Euractiv. “They want [an open functioning market] internally and they want it externally.”

The ERT survey comes amid growing trade frictions between Brussels, Beijing, and Washington – tensions that some believe could escalate into full-blown trade wars once Donald Trump re-enters the White House on 20 January 2025.

The former US president has pledged to impose a 60% tariff on all Chinese goods as well as a “universal” tariff of 10-20% on all other imports.

Demertzis, however, expressed scepticism that Trump would ultimately implement his tariff proposals, arguing that they were likely touted to win the favour of the electorate.

The analyst added that the incoming US president, a self-proclaimed ‘dealmaker,’ might also be expressing support for tariffs in order to coerce the EU to invest more in defence and purchase greater quantities of US liquefied natural gas (LNG).

“Economically, he is just going to say it and probably negotiate and extract rents [from] Europe,” she said. “So I would actually reserve judgment in terms of how much this will happen.”

Draghi report ‘transformative’

Meanwhile, the ERT survey showed that a vast majority of business leaders also supported former European Central Bank President Mario Draghi’s recent call to boost the Union’s flagging competitiveness by deepening the single market and reducing companies’ regulatory burden.

Ilham Kadri, ERT vice-chair, said the survey would highlight a strong confidence that “full implementation of the Draghi report will be transformative, providing the platform to make Europe the most attractive destination for investment.”

The ERT study comes amid widespread fears about the EU economy, plagued by a mixture of high energy prices, low levels of investment and weak domestic and external demand.

According to the European Commission’s latest forecast, the EU’s GDP will grow by just 0.9% this year – a third of the rate of the US.

In a potential boon to business leaders, Commission President Ursula von der Leyen said on Wednesday (27 November) that the “first major initiative” of her new Commission would be a “competitiveness compass” based on the Draghi report’s “three pillars”‘ of innovation, decarbonisation, and security.

Speaking ahead of the approval of her new team of commissioners by MEPs in Strasbourg, the centre-right politician also echoed Draghi’s call for a more pro-business environment and deeper market integration.

“We need to get back to what the single market does best. And make business easy across Europe,” she said.

[Edited by Anna Brunetti/Martina Monti]