Finance

Financial directors want European banking regulator

March 11, 2011

The prospects for the world economy are brighter, and this is manifesting itself in a higher demand for highly trained staff. Inflation remains a concern, however.

Over 70% of European CFOs (Chief Financial Officers) believe that the European Financial Stability Facility (EFSF) is unable or not sufficiently able to guarantee financial stability in Europe. Almost three-quarters of European CFOs also believe that a single European institution should be responsible for the regulation and monitoring of international (European) banks. This is the only way of guaranteeing a safer and more effective banking system. These are the findings of the latest survey of CFOs carried out by Tilburg University and Duke University.

Economic prospects

The positive economic sentiments of the final quarter of 2010 have continued into this quarter. American CFOs are more optimistic about their country’s economy than they have been at any point since the first quarter of 2007, with 56% of them saying that their optimism has risen. In Asia, 65% say the same thing, and 39% in Europe. Although optimism has risen on average, the number of optimists in Europe continues to lag behind the rest of the world. This is undoubtedly related to the fact that, despite more positive economic sentiments, the financial crisis remains one of the most significant causes for concern among European CFOs. Almost 70% of CFOs believe, for example, that the current European emergency fund cannot ensure financial stability in Europe because its mandate is inadequate and/or because it has insufficient funds at its disposal. Moreover, 70% of CFOs believe that supervision and monitoring of Europe's banking sector should be centralized at the European level.

As well as consumer demand and price pressure from competitors, the rise in fuel prices is also mentioned as a particular concern this quarter. Potentially, this could be a first indication of inflationary risks. Even more so because the CFOs expect the prices of their own products to rise by an average of 2.5%, the highest level since the start of 2007.

Prospects of the respondents’ own companies and employment opportunities

Sentiments regarding the financial prospects of the respondents’ own companies also continue on their upward trajectory. Almost half of the CFOs said that their optimism had increased during the first quarter of 2011. Average optimism also rose to its highest level since the beginning of 2008. This was particularly evident from the fact that the European CFOs anticipate a slight increase in the number of jobs available. This increase is expected specifically to take the form of temporary employment contracts and outsourcing contracts. The number of those being given permanent contracts is expected to decrease. Despite this, the recruitment and retention of good, qualified personnel remains one of the foremost concerns for businesses.

“The combination of positions and expertise that are being sought at the moment would appear to indicate growing economic confidence. We are seeing that the demand for highly qualified, specialist manpower is increasing, and the largest need is for product development engineers. We can see from this that businesses are ready to invest again, and that is clearly a step in the right direction," says Kees Koedijk, dean of Tilburg School of Economics and Management and founder of the European section of the survey.

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Quarterly Report of Q1 2011, CFO Survey (2011)

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