Bangkok--28 May--Grant Thornton
New research from Grant Thornton reveals that despite the economic problems caused by the sovereign debt crisis, support for the euro amongst business leaders remains strong, which may have a useful impact on the export sector of Thailand. Meanwhile we may have lost a good opportunity for Thailand-EU FTA negotiations, due to the unresolved political situation.
The findings, drawn from Grant Thornton’s annual Future of Europe report, show that 93% of businesses in the eurozone area want to see the euro survive and three in four (75%) say that entry into the single currency has benefited their organisation. Business optimism has also risen across the eurozone from 8% to 25% over the past three months.
Kanyanat Srirudchudchaval, Partner of Grant Thornton in Thailand said, "In 2013 Europe represented nearly 10% of all of Thailand's exports, so the strengthening economy and optimism in the eurozone bodes well for Thailand. Also the appreciation of the value of the euro will increase European purchasing power. However, the negotiations on the Thailand-EU Free Trade Agreement, launched on 6 March 2013, have effectively been frozen due to Thailand's current political turmoil. This has already negatively affected tariffs and more will follow, which makes our goods less competitive in Europe."
However, when asked whether they would like to see further integration between member states, businesses in France and Germany were markedly less positive compared with this time last year: in Germany, 55% of firms are now open to further economic integration, down 20 percentage points from this time last year; in France, support has dropped 12 percentage points to 57%.
Similarly, support for further political integration in Germany has fallen from 61% in 2013 to 53% this year, and in France from 35% to just 22%. The proportion of business leaders in France and Germany who do not want to see any further European integration have risen by 9 and 12 percentage points respectively.
Kanyanat commented: “The results show that the vast majority of business leaders in the eurozone remain committed to the success of the single currency as the region ramps up its recovery from the sovereign debt crisis. But now they are less sure about further integration - particularly in France and Germany, which have historically been the driving forces behind the EU project. Together these economies account for nearly half of eurozone GDP and despite vastly different economic performances since the financial crisis, they are now united by a loss of faith in further integration. At a time when the regional recovery is still fragile, further EU reforms, such as the banking union, still in their infancy, it’s a concern that the current balance integration doesn’t seem to be serving the business communities of two of its biggest member states very well.”
The IBR also reveals that while business support for further EU integration has wobbled in France and Germany, it is picking up elsewhere. Support for greater economic integration is increasing in a number of economies including Ireland (50% last year to 77% this year), Poland (54% to 67%) and Italy (56% to 61%). In Ireland, 95% of businesses are now open to further integration, up from 68% this time last year.
Kanyanat added, “there’s no doubt that the picture across Europe is much brighter now than it was twelve months ago. But Europe is not out of the woods just yet. Deflation is a growing concern, as is the plight of youth unemployment which is still unacceptably high. The situation in the Ukraine is also creating uncertainty. Against this backdrop, a loss of support at the heart of Europe’s business community is to be avoided at all costs if growth is to continue and the region is to strengthen. ”