European business leaders are increasingly pessimistic over the prospects of investing in the continent and are turning toward the USA for greater growth.

The latest  in ten European Roundtable for Industry’s Conference Board Measure of CEO Confidence for Europe has revealed that while the freefall in CEO confidence has been arrested, Europe is attracting less investment, especially in comparison to the US.

It warned leaders of key European industry and technology companies are alarmed at the lack of urgency in delivering on Draghi and Letta’s bold reforms to restore the business case for investing in the bloc.

The survey found its CEO Confidence Measure for Europe has climbed to 44, up from a historic low in Spring, when EU-US trade tensions plunged Confidence to a historic low of 27. However, this is the first time that confidence has stayed in negative territory for three consecutive editions – well below the neutral threshold of 50.

The gap is widening between Europe and abroad as business conditions outside Europe are improving, whilst the business climate in Europe is on a downwards trajectory – notably due to poor prospects for investment and employment, the ERT added.

For Europe, only a small majority of CEOs expect to stick to their investment plans, and just 8% intend to invest more than they planned six months ago. Over a third, however, will invest less than planned or have put decisions on hold.

The US, on the other hand, now attracts more investment than planned by 45% of CEOs.

“This time last year, 80% of business leaders in ERT expressed enthusiasm for Mario Draghi’s recommendations to restore the EU’s competitiveness,” the report added. “That survey found that if Draghi’s recommendations were fully implemented, CEOs would invest back into Europe rather than elsewhere.

“Such optimism one year ago contrasts with today’s reality where a striking 76% of CEOs have so far seen little or no positive impact from EU initiatives to implement Draghi and Letta in critical areas, such as regulatory simplification, Single Market completion, competition policy and energy affordability.”

Anthony Gooch Gálvez, secretary general, ERT commented “The results of this latest survey spell out problems that are often levelled at Brussels: a lack of speed and focus on the collective European interest.

“Current geopolitics and geo-economics mean Europe has no time to waste to restore its competitiveness and prosperity. The stakes are too high now to hide behind the cliché of ‘blaming Brussels’.

“No single country in the EU can weather the current geopolitical and economic climate on its own. And Europe’s model can only be maintained if, as a community, we get back on an economic growth path.”

Simplification leads the list of policy actions  business leader would like to see implemented to restore Europe’s competitiveness.

In all 90% of CEOs ranked regulatory simplification as a top five priority for the EU, with 31% naming it the number one issue.

“This needs to be complemented by protecting strategic industries and revisiting legislation to accelerate AI and advanced technology adoption,”  the study added. “Also of high priority are overhauling competition policy and introducing a Single Market Barriers Prevention Act.”

Maria Demertzis, economy, strategy and finance centre leader, The Conference Board Europe concluded: “CEO confidence is recovering from historical lows, but views remain gloomy as CEOs see limited impact of reform efforts.

“However, CEOs have been pessimistic about Europe for a year and a half and they see a brighter outlook for their business outside the continent, with the gap between business conditions in Europe and outside widening significantly. Increased uncertainty worldwide is leading to most companies not changing investment strategies in Europe and other geographies.

“However, and despite uncertainty, close to half of companies have revised plans to invest more in the US. CEOs continue to emphasise the need for reforms and ask countries to take concrete action to strengthen the business case for our continent.”