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Refugees entering Europe: a positive impact on the economy ?

Published on
18 January 2016

Nearly 60 percent% of European CFOs believe that accepting migrants will help solve the looming demographic problems their nations face, such as an ageing population and shrinking labour force, new data reveals. Overall they believe that the overall economic impact will be positive by a 55-to-34 percent% margin

The data was gathered  in the latest round of the Global Business Outlook Survey, conducted by Grenoble Ecole de Management, the Fuqua School of Business at Duke University, CFO Magazine  and Tilburg University. The survey, which ended December 4, has been conducted for 79 consecutive quarters and spans the globe, making it the world’s longest-running and most comprehensive research on senior finance executives. This round elicited over 1000 responses from global CFOs and finance directors.

Creating a new demand for goods and services

From a UK point of view, 63.7 percent of CFOs believe that the current migrant/refugee crisis will have a positive economic impact by creating a new demand for goods and services. Fifty-seven percent of CFOs think that their corporation would be willing to hire migrant quickly if the regulations allowed to do so.

Fifty-eight percent of UK CFOs agree to some degree that the crisis should be managed at an EU level rather than a national one; a sentiment which is shared by the majority of EU countries. Across Europe, CFOs also recognise the costs and challenges presented by the influx of refugees. Eighty-one percent (including two thirds of those CFOs from UK companies) say they think European leaders have mismanaged the crisis. A majority (55 percent) believe refugees will increase competition for jobs and drive down wages.

Europe-wide, nearly 40 percent say their own firms would be willing to hire refugees to help with the crisis, while nearly 30 percent say their firms would not

“In general European CFOs have a mixed reaction to the refugee crisis," said Philippe Dupuy, finance professor at Grenoble Ecole de Management, a partner of the survey. “On the whole the respondents are positive, recognising the benefits that migrants can potentially bring to the European economy by helping to solve the future demographic challenges of Europe, as well as bringing increased demand for goods and services. On the other hands concerns have been raised around the negative ramifications, such as disruption to social cohesion and increased public spending.”

UK CFOs optimistic

Globally the survey found that Business spending will be weak in 2016 because of slowing growth in China and low oil prices. At the same time, employment should continue to make steady gains.
CFO optimism about the UK economy is still one of the highest in Europe (62.3 out of 100 versus a top at 66 for Belgium and 68 for Germany).  Earnings are expected to increase by 9.3 percent.

Pressing concerns

Forty-one percent of the UK CFOs have indicated that they have difficulty attracting /retaining qualified employees and identified this as the joint most pressing concern for their top management team. This is significantly more than in continental Europe where this number stands at 25 percent on average.

Economic uncertainty was identified as the other biggest UK, while currency risk is mentioned as a top 3 risk by 33 percent of the UK CFOs, down from 50 percent last quarter. Across Europe more widely the top concerns are economic uncertainty and weak demand for products and services.

Business spending

U.S. firms will increase capital spending 2.6 percent in 2016, and research and development slightly more than 3 percent. Spending will fall by more than one-third in the energy sector and remain flat in services and consulting, transportation and technology.
Business spending will increase by less than 3 percent in Latin America, though it will range from 5 percent in Mexico to a reduction of 5.5 percent in Brazil. Businesses are expected to increase spending by 3.7 percent in Europe and a median 5 percent in Africa and Asia (outside of China and Japan), though in China spending is expected to rise less than 2 percent.

Global Economic Outlook

Optimism about the economy remained steady in Europe (58). Capital spending, employment and wages are all expected to increase more than 3 percent. European top concerns include economic uncertainty and weakness, currency risk and difficulty attracting the right employees. Forty-three percent of European firms say their assets continue to age, relative to only 17 percent that say the asset stock is growing younger.
CFO optimism about the U.S. economy remained steady this quarter and remains among the strongest in the world. Still, optimism has declined since the first half of 2015. On a scale of zero to 100, financial executives rate the outlook at 60, down from 65 in the spring. Business spending is expected to remain somewhat soft, but hiring will remain steady. Top concerns in the U.S. include economic uncertainty, difficulty finding qualified employees, regulatory requirements and costs of benefits. Executives expect health care spending to increase by more than 7 percent in 2016. Data security continued its steady rise as an important concern.

Canadian optimism mirrors the U.S. at 59. Canadian CFOs expect median employment growth of 1 percent and capital spending growth of 3.7 percent.

Last quarter was the first time optimism in Asia was lower than in North America and Europe. Asian optimism outside of Japan remained low this quarter at 54, down from 63 in early summer. Capital spending is expected to rise a median 4 percent in Asia with China included, and wages are expected to rise by about 7 percent across Asia. Full-time employment is expected to decrease in China and Japan and increase by 2.3 percent in the rest of Asia. Top concerns include economic uncertainty, currency risk and governmental policies. Chinese CFOs are also worried about productivity.

African optimism increased slightly this quarter (from 48 to 49). Employment is expected to increase by 3.2 percent and wages by about 7 percent in 2016. Capital spending is expected to rise by a median 5 percent. More than half of African firms indicate their asset stock is aging, implying that more investment in new assets is required. African CFOs are worried about currency risk, economic uncertainty and government policies and regulations.

Latin American economic optimism remains lowest in the world (46 on a 100-point scale), though it is a region of contrasts. Optimism in Brazil and Chile remains low at 42, but strong in Mexico (64). Full-time employment and spending are both expected to fall by more than 5 percent in Brazil, while increasing by about 2 percent in Mexico. The strong U.S. dollar is having a net positive effect in Mexico.

Detailed results, including tabular summaries of the numbers in this release and results from previous surveys are available at