Thu. Apr 25th, 2019

Seven out of ten companies plan to increase their business this year despite deceleration and political uncertainty - La Provincia

Seven out of ten companies plan to increase their business this year despite deceleration and political uncertainty - La Provincia


Most Spanish businessmen expect to increase their turnover during this year, even thougha proportion close to half anticipates that the economic situation will get worsein the next few months, according to the report "Perspectives Spain 2019", produced byKPMGin collaboration with the Spanish Confederation of Business Organizations (CEOE).

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The work is based on a survey that gathers the opinions of 1,030 presidents, general managers, directors, managers and intermediate managers of companies located in Spain and that belong to 25 different activity sectors. Their conclusions certify thatand concern grows about problems like the 'Brexit', the economic slowdown in Europe, the recession in Italy and the growing global trade tensions. How is the outcome of these problems "will depend on the evolution of the international economy, European and also the Spanish", is reflected in the report.

The uncertainties cited explain that in the survey (conducted between the months of November and January) andl 48% of entrepreneurs and managers venture that the economy will deterioratein next twelve months. It is a higher percentage in eleven points than the one published a year ago. 45% of respondents expect the situation to remain the same and only 7% (compared to 35% in 2018) predicts an improvement. There is concern and not only for these international clouds, also due to domestic political uncertainty, the challenge posed by technological change and the emergence of new problems associated with it, such as cybersecurity.

Faced with this complex scenario, the president ofKPMGin Spain,Hilario Albarracín, makes the following analysis: "The managers look with caution the economic evolution before the forecasts of decelerationand geopolitical uncertainties, but at the same time maintain investments in technology to accelerate their processes of digital transformation. "To this, the president of the CEOE, Antonio Garamendi, adds:" In addition to realism and caution, entrepreneurs have optimism , the energy and the confidence to lead our companies through this complicated environment we are in ".

Billing

The business message for this 2019 is therefore of moderate optimism.69% believe that the sales of their companies will grow, although this group of optimists has decreased from one year to the next (77% in 2018).

job

The deterioration of expectations is transferred, downstream, to employment forecasts.39% of employers plan to increase the workforce(45% in the previous survey), while 40% will keep them stable and 21% acknowledge that they will address adjustments, a higher proportion than a year ago (17%).

Investments

Almost half of employers and managers (49%) plan to increase investmentsand 37% estimate disbursements analogous to those of 2018. With what destinations? Most focus on the digitization of business, a process that no sector escapes. Companies give priority to data analysis, to the promotion of cloud storage technologies ('cloud') and, to a lesser extent, to more disruptive technologies such as robotics or artificial intelligence.

The road to digitalization

Thedigital transformationIt is indicated in the study by 55% of entrepreneurs as the main challenge facing their business in the short term. The vast majority (nine out of ten) responds that it has already started it and reaping positive results. However, the problem of cybersecurity is emerging as a growing concern.

National risks

Good part of the directors(47%) recognizes that Spanish political uncertainty has led him to stop investment decisions. Another not insignificant 22% of managers say that for the same reason has paralyzed hiring new staff. The political future of the country is the threat most cited by respondents for the future of the economy in the coming months.

International threats

Entrepreneurs recognize that they are very concerned aboutthe impact that the exit of the United Kingdom from the club of the European Union can have on its business. Half of the respondents say they maintain some kind of commercial relationship with the British Isles. They fear the blow they may suffer if there is a "Brexit" hard, without agreement, and that this may bring tariff barriers and other penalizing regulatory changes, as well as a contraction of the British economy and depreciation of the pound.

The sectors

Expectations vary by sectors. The most optimistic are companies closely linked to the technology business, which are at the epicenter of digital transformation. The worst forecasts are recorded by the automotive sector due to the uncertainties already mentioned. From a billing point of view, it is the insurance companies and, again, the technology companies that have the best prospects.

Demands

What do companies request from public authorities in view of the described scenario? Among the priorities that should be addressed by the Government that leaves the polls in economic matters is the demand forgreater simplification of bureaucratic procedures. The answers give special relevance also to the need to adapt the training programs to the competences linked to innovation. It is also important the percentage of entrepreneurs who demand more incentives to create jobs and those who ask for a reform of the tax system.

Hilario Albarracín, President ofKPMGin Spain, he concludes that "the doubts about how and how long the global deceleration could last is what imposes caution.There are too many factors of uncertainty and geopolitical risksThey are still alive and will evolve throughout 2019. "And he adds:" Captaining ships among troubled waters, Spanish managers also face the transformation of their business models in the face of the impact of new disruptive technologies. "

In the same line, the president of theCEOE,Antonio Garamendi, makes this diagnosis: "The Spanish economy ended last year growing to important levels, quite above those of the European Union, but the problem that entrepreneurs have been seeing for some time now is thatthat growth is less or has less strength than previous yearss ".

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