European businesses to set priorities amidst inflation hikes
The European Payment Report 2023 delves into the ways businesses are handling economic disruption and managing liquidity challenges. As inflation rate hikes continue to be a growing concern, European companies find themselves in a position where they must prioritize cost-cutting over growth. The report uncovers how businesses are coping with this liquidity crunch.
Intrum’s latest study explores how businesses are coping with economic disruption and how they are managing the liquidity crunch. The increasing concern about inflation rate hikes is forcing European businesses to prioritise cost-cutting at the expense of growth.
Impact of high inflation
At a time of high inflation across Europe, respondents to EPR 2023 say that rising prices and higher borrowing costs are posing the greatest threat to their revenues. The clear majority believe it will be at least a year until the inflation rate is stabilised in their country at 2% or less. As well as directly impacting customer payments, inflation is expected to make eight in 10 employees ask for higher-than-average pay rises by the end of the year.
The risk is that these wage increases add to the inflationary pressure, as companies will transfer at least some of their increased costs to the prices they charge for goods and services.Anna Zabrodzka-Averianov, Senior Economist at Intrum
A vicious circle: Sacrificing growth for efficiency
This year’s findings show that cost-pressures are undermining companies' strategic growth plans. Although respondents largely say that they want to grow the business or embrace digital transformation, they are instead focusing on efficiency drives and cost reductions.
Half of Europe’s companies still want to grow their businesses – 51 per cent say it remains a priority for the year ahead – yet almost three in four (72 per cent) say they will focus on cutting costs and improving efficiency. The risk is that, as businesses rein in their spending, the economy will continue to slow without affecting the upward pressure on prices.
Sustainability remains a high priority
On the plus side, businesses are generally maintaining their commitment to sustainability despite economic uncertainty. Almost six in 10 say they reduced their energy usage to minimise expenses but will now keep usage low to support the environment.
Insights from the European Payment Report 2023
This article is based on Intrum’s latest research to understand the impact late payments have on the development and growth of European enterprises. With insights from more than 10,000 executives, we explore how businesses are coping with economic disruption and how they are managing the liquidity crunch. Today, you can access the full pan-European Report, a White Paper including the country snapshots, plus a recording of the EPR 2023 Webinar.
