ADVANT research underscores opportunity for Europe amid political and economic headwinds, but challenges remain
MILAN, MUNICH & PARIS (9 March) – Business confidence around prospects for investment and growth in Europe is riding high despite recent economic and geopolitical challenges, according to new research among GCs across Europe and the U.S.
For its report released today – Europe’s Opportunity Outlook – European law firm association ADVANT surveyed or interviewed more than 800 GCs in France, Germany, Italy and the United States, and found that four out of five (82%) GCs said their company views continental Europe as attractive for corporate investment and commercial growth. Meanwhile, two-thirds (66%) report their organization has made Europe more of a priority in light of recent geopolitical and regulatory risks.
Looking further ahead, a significant majority (83%) believe their organization is likely or very likely to expand or invest further within existing European markets in the next three to five years. A similar proportion (82%) say they are likely to expand into new or additional markets in the region.
Surprisingly, American GCs are even more bullish on Europe than Europeans themselves. A higher proportion of U.S. GCs (87%) believe Europe will benefit from global business expansion into the continent when compared with Italy (69%), France (71%) and Germany (76%).
“The EU has an enviable position as one of the world’s largest economies, a major producer and exporter of goods and services, and one of the most reliable and respected legal and regulatory systems anywhere,” said Gilles Gaillard, partner at ADVANT Altana. “Recent geopolitical and economic turbulence has brought into ever sharper relief just how attractive Europe is as an important and resilient place to invest and do business. This reality is clearly reflected in the views of GCs, who are central to how companies prepare for and respond to a world characterized by fast-paced change.”
Simplifying and harmonizing trade rules should be top priority
However, the findings also underscore that EU policymakers must accelerate the push to further enhance Europe’s competitiveness in order to unlock more investment into Europe in GCs’ eyes. One in five GCs (20%) singled out the need for simplification and greater harmonization of trading rules as the most important change they thought the EU should make to increase its attractiveness for foreign businesses and investment. Providing greater tax incentives was the second single most important priority (for 16%) and encouraging innovation was third (15%).
And while the EU’s legal and regulatory system overall is viewed very favourably, particularly for its reliability and stability, a significant minority of GCs (12%) are concerned that regulators fail to fully understand the commercial realities faced by businesses operating in Europe.
“The EU has set out clear objectives to fuel competitiveness and foster future prosperity by simplifying regulation and better aligning EU and national policies, but the jury is still out on whether these actions go far enough, fast enough,” said Dr Christian von Wistinghausen, partner at ADVANT Beiten. “There is a real risk that the volume and complexity of regulation have the potential to put businesses operating in Europe at a disadvantage compared to lighter-touch jurisdictions.”
AI a critical issue for regulators…and lawyers too
Artificial intelligence (AI) and cybersecurity were identified by GCs as key areas requiring urgent legal or regulatory attention or reform at the EU level (by 41% and 38% of survey respondents, respectively). A similar proportion (42%) said these issues are major concerns for legal teams themselves, as they grapple with helping their organizations mitigate risk, ensure compliance, and leverage the potential of new technologies.
More broadly, technological innovation is widely seen as a competitive differentiator for law firms, GCs said. More than a third of respondents (36%) said the use of technology (including AI) was a key factor when choosing an external legal advisor, and the same proportion (36%) are interested in their use of data analytics on fees, matters, and performance.
Overall, the report notes that opportunities abound, both for Europe itself and for companies eyeing investment there in the future. “Europe clearly has many strengths to build on, even as it is buffeted by economic headwinds and geopolitical turbulence,” added Guido Fauda, partner at ADVANT Nctm. “It must chart a course towards even greater productivity and competitiveness, demonstrating on the world stage that Europe remains very much open for business.”
More information and access to the full report is available at www.advantlaw.com/europe.
