GT IBR 2012 - focus on Netherlands
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  • 1. Focus on: NetherlandsInternational Business Report 2012 – Economy focus seriesThe economy The business perspectiveDespite its historic stability and economic strength, The Grant Thornton International Business Reportthe Netherlands economy has been unable to escape (IBR) surveys the views of more than 11,500the impact of the crisis in the eurozone. Having businesses in 40 economies around the world. Thisexpanded strongly in Q1, the economy has slowly report focuses on the experiences of privately heldground to a halt as business and consumer businesses in the Netherlands and their expectationsconfidence wanes in the face of the economic storm for the next 12 months, as illustrated in figure 1.which is threatening to engulf not just Europe, but The IBR survey tells us that businesses in thethe entire global economy. The budget for 2012 is Netherlands are much less optimistic about theiraiming to return the public finances to balance and economy over the next 12 months, compared withensure financial sector stability. 12 months previously. Business expectations for The key indicators1 are highlighted below: revenue and profitability have risen since last year• following quarterly growth of just 0.2% in Q2, but have not returned to 2008 levels. Bureaucracy the economy contracted by -0.3% in Q3 from and a lack of skilled workers are cited as the most the previous quarter; year-on-year the economy pressing constraints on growth. expanded by 1.1% in the third quarter• exports remained positive in Q3 at just by 0.3%; this was down on the three months to June (1.0%), but represented a 4.0% from the same period 12 months previously• consumer spending contracted by 0.2% from the previous quarter in Q3, with household spending dropping 1.1%• capital expenditure was up by 4.6% year on year in Q3, although it contracted by 1.1% quarter on quarter.1 Source: International Monetary Fund, The Economist and Experian.
  • 2. The outlook Figure 1: Key indicators for PHBsThe outlook for the Netherlands economy isinextricably linked to that of the eurozone. Growth Netherlands compared to the EU average 2009 2010 2011 2011of 1.4% is forecast for 2011, but following Neth Neth Neth EUcontraction in Q3 the economy is likely to slide Outlook for the economy over the next 12 months Net optimism -37% +16% -44% -17%back into recession due to declining consumersentiment, fiscal tightening and weakening export Change in employment levelsdemand. A contraction of 0.6% in 2012 is forecast to Net hiring expectations -5% +12% +18% +15%be followed by a period of moderate growth,averaging 1.5% per annum in the period 2013-16. A Constraints on expansioncomplete meltdown in the eurozone represents a Regulations/red tape 25% 23% 22% 29%serious downside risk to this forecast. Lack of skilled workers 40% 18% 22% 22% Exports have held up to date, but look likely to Source: Grant Thornton IBR 2011decline over the next year as demand from Europeand the US slumps. The manufacturing andagricultural industries in particular are likely tosuffer from diminishing exports. The current Talk to us to find out how we can help you dealaccount is expected to remain in surplus up until at with the challenges your business is facing today.least 2016, although this is likely to narrow from anestimated peak of 8.4% of GDP in 2011. Frank Ponsioen Government policy over the next five years is T +31 (0) 172 42 38 70likely to remain focused on deficit reduction, with E frank.ponsioen@gt.nlreform of the social security system and downsizing W www.gt.nlthe size of the civil service and military high on theagenda. The official retirement age has also beenraised to 67 but this will not come into effect until2025.
  • 3. International Business Report resultsThe Grant Thornton IBR 2011 reveals that global Figure 2: Outlook for the economy over the next 12 months: 2011business optimism dipped again in the fourth Net percentage of businesses indicating optimism less those indicating pessimismquarter. Businesses sentiment in the Netherlands 40 30plummeted to net -44%, down from net -8% in the 20previous quarter. Globally, the quarter-on-quarter 10average declined from 3% to 0% 0 The sovereign debt crisis is weighing heavily on -10 -20businesses confidence in Europe; business optimism -30across the European Union dropped to -17% in Q4. -40However confidence in the BRIC economies ticked -50upwards to 34%. Q1-2011 Q2-2011 Q3-2011 Q4-2010 Netherlands 35 34 -8 -44 Year-on-year optimism amongst businesses has EU 31 34 0 -17declined slightly from net 22% in 2010, to net 16% Global 34 31 3 0across 2011. Source: Grant Thornton IBR 2011Optimism/pessimism• business optimism in the Netherlands fell further in Q4, dropping to -44%, down from -8% in Q3• the EU3 average declined from 0% in Q3 to -17% in Q4• globally, business sentiment dropped by 3 percentage points in Q4 to stand at 0%.2 the balance is the proportion of companies reporting they are optimistic less those reporting they are pessimistic.3 for the purposes of IBR, the term ‘EU’ refers to those EU countries covered by our survey – Belgium, Denmark, France, Finland, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Spain, Sweden and the United Kingdom.
  • 4. Employment Figure 3: Employment history: 1993-2011• net 18% of businesses in the Netherlands expect Percentage balance of businesses indicating an increase against those indicating a decrease to increase staff levels over the next 12 months, 60 55 compared with 15% of businesses across the EU 50• actual employment growth reported by 45 businesses in the Netherlands for 2010 (-4%) 40 was much lower than expected 12 months 35 30 previously (12%). 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11* Exp. Neth. 8 -16 30 38 29 27 40 30 42 33 3 -1 15 18 40 56 -5 12 18 Exp. EU -6 -5 18 14 10 20 26 32 34 20 5 9 10 12 27 27 -12 -1 15 Act. Neth. – – 1 -13 -5 -9 -8 41 26 25 -1 -12 3 34 45 23 18 -4 – Act. EU – – 24 17 21 36 29 41 41 18 7 6 10 25 30 17 -19 14 – *2011 data will be documented in IBR 2012 Please note that the expected values are represented by the bars and the actual values by the lines Source: Grant Thornton IBR 2011Revenue expectations Figure 4: Revenue expectations: 1993-2011• expectations for increasing revenues rose on Percentage balance of businesses indicating an increase against those indicating a decrease average across the past four quarters to stand at 80 70 45% 60• the EU business average also rose to 40%, up 50 from 28% 40• globally, expectations have risen from 40% in 30 20 2010 to 50% in 2011 10• however, revenue expectations in the 0 Netherlands dropped from 50% in Q3 to just -10 20% in Q4. -20 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Netherlands 39 30 68 64 65 61 71 70 72 55 43 32 62 53 71 79 4 32 45 EU 23 40 65 58 47 64 58 63 64 46 33 44 49 51 59 65 5 28 40 Global – – – – – – – – – – 44 58 63 61 70 63 11 40 50 Source: Grant Thornton IBR 2011
  • 5. Profitability expectations Figure 5: Profitability expectations: 1993-2011• across the past four quarters an average of net Percentage balance of businesses indicating an increase against those indicating a decrease 34% of businesses in the Netherlands expect 60 50 profits to rise compared with 21% in 2010 40• however, the quarterly data shows profitability 30 expectations in the Netherlands dropping to just 20 6% in Q4 10 0• the EU business average for the past four -10 quarters has risen by 12 percentage points while -20 the global average rose by 10 percentage points. -30 -40 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Netherlands -1 13 45 57 31 32 49 47 55 39 12 18 34 40 54 56 -15 21 34 EU -3 10 40 26 21 37 29 34 36 17 17 32 33 29 40 36 -13 17 29 Global – – – – – – – – – – 31 42 45 46 52 41 -5 29 39 Source: Grant Thornton IBR 2011Constraints Figure 6: Constraints on expansion• a lack of skilled workers is more of a concern Percentage of businesses rating constraint 4 or 5 on a scale of 1 to 5 where 1 is not a constraint and 5 is a major constraint this year with 22% of businesses in the Netherlands citing it this year, up from 18% in Availability of skilled workforce 22 22 2010 Regulations/red tape 22• regulations and red tape remain a key concern 29 for businesses in the Netherlands; 22% raised it Shortage of orders/reduced demand 17 29 as a problem over the past four quarters, Cost of finance 12 although this remains below the EU average 21 (29%). Shortage of long term finance 11 23 Shortage of working capital 9 24 ICT infrastructure 8 8 Transport infrastructure 6 8 Netherlands EU Source: Grant Thornton IBR 2011
  • 6. Support of lender Figure 7: Level of support provided by lenders• just over half of businesses in the Netherlands Percentage of businesses are happy with the level of support provided by 50 45 lenders; 52% class lenders as supportive or very 40 supportive towards their business 35• this compares with 64% of businesses in the EU 30 as a whole 25 20• 15% believe that lenders are unsupportive or 15 very unsupportive of their business. 10 5 0 10 19 42 45 31 21 13 10 2 3 Very Supportive Neither Unsupportive Very supportive supportive unsupportive or unsupportive Netherlands EU Source: Grant Thornton IBR 2011Government policy Figure 8: Are you going to use the “labour cost arrangement” as of 1 January 2012 or are you• two thirds of businesses in the Netherlands are already doing this? Percentage of businesses neither using nor planning to use the “Labour cost arrangement” as of 1 January 2012 Yes, as of 1st January 2012 1• a further 60% are not familiar with the (big) Yes, already doing this 16 fiscal advantages of the ‘succession (fiscal) No 66 facility’. Don’t know 8 Source: Grant Thornton IBR 2011
  • 7. The Grant Thornton International Business Report (IBR) is a quarterly survey of around 2,800 senior executives in privately-held and listed businesses all over the world. Launched in 1992 in nine European countries the report now surveys more than 11,500 businesses leaders in 40 economies on an annual basis providing insights on the economic and commercial issues affecting companies globally. In the Netherlands, 200 businesses were surveyed across all industry sectors. These businesses ranged from small to medium in size with total employment of between 50 and 499. Data for this report were drawn from interviews conducted between January and December 2011. To find out more about IBR and to obtain copies of reports and summaries visit: www.internationalbusinessreport.com. The site also allows users to complete the survey and benchmark their results against all other respondents by territory, industry type and size of business. Participating economies Argentina Malaysia Armenia Mexico Australia Netherlands Belgium New Zealand Botswana Peru Brazil Philippines Canada Poland Chile Russia Mainland China Singapore Denmark South Africa Finland Spain France Sweden Georgia Switzerland Germany Taiwan Greece Thailand Hong Kong Turkey India United Arab Emirates Ireland United Kingdom Italy United States Japan Vietnamwww.gti.orgwww.internationalbusinessreport.com© 2012 Grant Thornton International Ltd. All rights reserved.Grant Thornton International Ltd (Grant Thornton International) andthe member firms are not a worldwide partnership. Services aredelivered independently by the member firms.