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Sweden the least stressful country for family businesses

Sweden and the US are the two least stressful countries in which to operate a family owned business, but stress levels continue to rise rapidly in high-pressure Taiwan.

Accountants Grant Thornton International released its GTI International Business Owners Survey in November after polling 3000 mid-sized family business owners from 28 countries.

The survey found that only 20% of Swedish business owners said their stress levels increased or increased significantly over the last year, the lowest increase across the 28 countries surveyed.

Next was the US, where 39% of business owners reported higher stress levels, and 16% reported their stress levels had fallen.

At the other end of the spectrum were family businesses in Asia, with 90% of Taiwanese owners reporting higher stress levels. This was up from 76% in 2005. Also reporting high results were Mainland China (84%) and the Philippines (78%).

In terms of taking holidays, the worldwide average was 15 days a year. French family businesses, with 26 days, had the most days off followed by the UK, Sweden and Italian families all with 21.

Stressed out Asian business operators also took the least holidays, with eight in Taiwan while Thai businesses only took four days a year.

In terms of economic prospects for the year ahead, there is continued optimism among medium-sized businesses. For most countries the outlook is perceived as positive or very positive. But after three years of above-trend global growth there are expectations that the pace of expansion will moderate, and the overall picture was rather less buoyant than in recent surveys.

Confidence is highest in India, for the third year in a row, followed by Ireland, South Africa and Mainland China. Four countries are pessimistic – Taiwan, Japan, Botswana and Italy. But pessimism in Japan has decreased markedly in recent years.

Only eight countries cite shortage of orders or reduced demand as a constraint. Heading the list jointly are Sweden and Japan. Though showing encouraging evidence of recovery from the weakness of the past 15 years, the Japanese economy still lacks strength, and medium-sized businesses clearly do not yet feel confident that demand is sufficiently strong to underpin expansion.

Sweden’s position at the top of this group was not unexpected, found the survey, since it occupied the same place last year. But the economy is expanding at a solid pace and it is difficult to explain why business owners persistently feel shortage of orders as such a strong constraint.

Economic dynamism does not preclude countries from appearing in this group. A number of East Asian economies, including Mainland China, that are experiencing boom conditions, and Spain, one of the fastest growing economies in the EU, are also included. Expectations about turnover (revenue), selling prices, employment and investment have picked up, as the economic outlook in the eurozone appears rather more upbeat than in recent years. The proportion of EU businesses that export has stabilised in recent years, but is much lower than in the 1990s, reflecting muted demand from Germany and Italy. Support for the joining the euro is diminishing in Sweden and the UK.

The results of the 2006 survey provide encouraging evidence of further gradual economic recovery from the trough of 2003. At that time, the global economy was experiencing a serious downturn and several EU countries were in recession. The EU as a whole saw very weak growth. This unfavourable economic backdrop was reflected in the 2003 survey. Expectations of business performance turnover plunged to a nine-year low; export growth expectations were the joint-lowest on record and employment prospects were very subdued. Since then, economic activity in the EU has picked up slightly, underpinning a mild improvement in expectations in all indicators of business performance in the past two years.

This trend continued with prospects for 2006 being boosted by a strong economic upturn in the third quarter of last year, coinciding with the period in which the survey was conducted. Although recognising that the improvement is likely to be very modest, businesses are more optimistic about turnover and employment than at any time in the past five years. Investment plans for plant and machinery are near their all-time high. Expectations regarding selling prices remained on a solid upward path and are the best in a decade. Despite the improvement in expectations of key performance indicators since 2003, business optimism in the EU is still relatively subdued. It continues to lag well behind North America on all indicators except exports, where it is slightly ahead, as it has been in the past few years. The EU also lags behind East Asia on most indicators (turnover, employment, profitability, and investment intentions) when Mainland China is included in the results.

The eurozone has seen a generally weak economic performance since its inception at the turn of the century. In the six years prior to the establishment of the eurozone, both Sweden and the UK achieved consistently faster growth than the average for the countries that eventually formed the euro area. The performance of the past six years merely continues that trend.

The relatively strong economic performance of Sweden and the UK is reflected in much more positive expectations regarding turnover, employment and investment than in the eurozone as demonstrated in each survey since 2000.

EU optimism generally low, despite a marked upturn in Germany and the Netherlands. Overall, confidence in the economic outlook remained as downbeat as in recent years, but there were some encouraging developments. Most notable was a continued improvement in Germany’s balance, with business owners now distinctly optimistic. The balance has moved from –37% in 2003 and –6% in 2004 to +17% last year and +41% in the current survey. The Netherlands has seen a similar pattern, with the mood moving from negative in 2003 to very positive +63% this year.

There was also an upturn in Ireland, where the dynamic economy generates very high optimism levels, +84% on this occasion exceeded only by India. In Sweden there was little change with a balance of +51%. Elsewhere in the EU results were weak, with respondents only fairly optimistic about the economic outlook (Poland and Spain) or indicating sharp falls in optimism. The most severe erosion of confidence was in the UK, from +46% to +8%, even though the economic slowdown last year was relatively modest. However, export growth disappointed and consumer spending slowed more sharply than expected. Italy, which has seen a small positive balance in the past two years, moved into negative territory (-8%) on this occasion as the economy fell into recession in the first half of 2005.

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