Euro break-up: Businesses have no contingency plans

London: More than three-quarters of executives surveyed on the eve of the latest flare-up in the Eurozone crisis said their businesses had no contingency plans for the break-up of the single currency zone, even though the majority said such an outcome would have a significant impact on their companies.

The latest FT/Economist Global Business Barometer, a survey of more than 1,500 senior executives, exposes a lack of corporate preparation for the event.

Fewer than a quarter of respondents, surveyed between April 13 and May 8, said their companies had contingency plans for a Eurozone break-up, even though 42 per cent and 29 per cent respectively said such an event would have a "somewhat" or "very" significant effect on business.

Least prepared

Respondents in eastern Europe were least prepared for a Eurozone break-up even though their companies appeared particularly exposed to the consequences — 84 per cent said a break-up would have a "somewhat" or "very" significant effect on their business, but only 10 per cent said their companies had made contingency plans.

Respondents in Asia-Pacific were slightly more prepared than respondents in western Europe, with 27 per cent and 25 per cent respectively reporting they had plans in place.

Big companies appeared better prepared than small companies, although half of respondents at companies with more than $10 billion (Dh36.78 billion) in revenue said they had no plans in place.

The survey, conducted largely before the Greek elections on May 6, found respondents feeling better about the global economy and increasingly optimistic about prospects for their companies and industries.

About 31 per cent of those surveyed thought the global economy would worsen in the next six months, outnumbering the 26 per cent that thought it would improve. However, the net balance was the least negative since the first quarter of 2011, and a marked improvement from three months earlier when pessimists outnumbered optimists more than two to one.

In every region except western Europe, more respondents said their companies expected to increase employee numbers than said they expected to reduce them. There was also a slightly positive net balance of respondents who said their companies planned to increase capital expenditure, with the exception of eastern and western Europe.

Perception of India, China

The survey found a sharp decline over the past year in executives' perceptions of the "business friendliness" of India, China and Brazil, three of the world's biggest developing econ-omic powerhouses.

The majority of respondents thought the yuan (official currency of China) was significantly undervalued, 18 per cent thought it was significantly overvalued, rising to 19 per cent in Asia-Pacific and 20 per cent in western Europe.

— Financial Times