Europe's outlook: Cheer or jeer?

By Andrew Walker BBC World Service Economics correspondent

We have heard no end of views from the political world about what Europe needs to do to come out from the economic mess it's now in. But how does it look from business?

Is the outlook as grim as the headlines suggest? Or are there reasons to be cheerful - or at least moderately optimistic?

I have spent a day at an event in Brussels called the European Business Summit. Nobody denied the immediate short-term challenges, but there were some relatively upbeat views, not universally shared, about the long term. First, the optimists. Christian Morales is a vice-president of Intel, the computer chip maker, and he is the firm's general manager for Europe, the Middle East and Africa. He says: "It is good that Europe is going through its current transformation now and not 10 years down the road."

Tough though things are in Europe, he says Intel is managing to increase sales of its products. Governments and business want to be more competitive and so they are investing in technology. In the last four years, Intel in Europe and neighbouring countries has almost doubled its workforce to close to 20,000.

Karsten Langer is another optimist. He is a partner in the international investment firm Riverside. He said: "Europe is a great place to invest right now. Many of the best successes were founded in the depths of recession and I think there is a lot of innovation going on in Europe."

Not flexible enough

Inevitably, there are some who are less upbeat. Jean Schmitt, managing partner of Jolt Capital in Paris, thinks Europe is pretty good at innovation, but not at turning new ideas into European jobs.

He described a firm that Jolt invested in that makes lenses for mobile phones. The research and development comes entirely from Europe, he says. They have been hugely successful, but they need flexibility. They need to be to hire but also to be able "to go down": in other words, to lay people off when demand drops.

He says: "The company had to move to Singapore because there is no flexibility for jobs in Europe."

Statoil says there is work to be done on the EU internal market

Mans Hultman set up a technology business called QlikTech in his native Sweden, but as it grew, he felt the need to take it to the US. He says it was the easiest way to increase the value of the company. Investors understand technology better there, he argues. The big vision he had was to launch the company on the Nasdaq, the US stock market where the leading technology companies are traded.

There are some themes that I heard a lot at this event. The labour market in Europe kept coming up - the issue raised by Jean Schmitt and others. It's too difficult and expensive to hire people and fire them if you have to.

It varies between countries. The Nordic countries were generally seen as more flexible, along with Germany in recent years.

Spain also got some praise for recent reforms. Labour markets in Italy and France were seen as more problematic.

Integration needed

Tax was another concern. I heard complaints that it penalises employment and wealth creation. And a number of people were concerned that the weakness of European banks makes it harder for firms to borrow money.

Karsten Langer points to the contrast between Europe and the US. In Europe, most lending comes from banks. In the US, by contrast, most comes from capital markets. And that, he believes, is one reason why the US has recovered more from the financial crisis.

There was also a lot of support for more economic integration across Europe.

Jean Schmitt argues that a large market is needed for companies to be able to identify a niche and make it work for them. Helge Lund, chief executive of the Norwegian energy company Statoil, says his industry would benefit from a more integrated European energy market.

Now, you could argue that this was, in the statistical sense of the word, a biased sample of business opinion. Anybody who goes to a Europe-wide conference in Brussels is likely to be relatively well disposed towards an integrated European economy. Even so, the enthusiasm for what's called "completing the internal market" was striking.

Equally, many people outside this business community would react with dismay to the calls for an easier legal environment for "hiring and firing".

The tone of this business summit was not exactly "off to the races". But nor was the mood one of unremitting gloom. Many felt Europe might be changing in ways that they think could be good news for business.

You can hear more from that European Business Summit in the BBC World Service Radio programme Business Daily.

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