Title: "Gloomy Economic Outlook: Majority of Companies Expect Deterioration, Profits Under Pressure"
Economics•18 Sep ’23 21:00 Author: Remy Kock
VNO-NCW and MKB-Nederland have asked directors of 325,000 companies how they view the coming year and the rest of this year. And the outlook is bleak: only 8 percent expect the economic situation to improve, and more than 50 percent are gloomy. “It is very low,” said policy secretary Kasper Buiting of VNO-NCW and MKB-Nederland.
VNO-NCW and MKB-Nederland have asked directors of 325,000 companies how they view the coming year and the rest of this year. And the outlook is bleak: only 8 percent expect the economic situation to improve, and more than 50 percent are gloomy. “It is very low,” said policy secretary Kasper Buiting of VNO-NCW and MKB-Nederland. (ANP / Berlinda van Dam)
According to Buiting, 50 percent even expect a deterioration in the economic climate. ‘The majority of sectors in the Netherlands are already negative at the moment, but things are only getting worse.’
‘The majority of sectors are already negative, but things are only getting worse’
Kasper Buiting, VNO-NCW and MKB-Nederland
One of the reasons for this is the corona crisis and the subsequent debts. The high energy price, labor costs and high purchasing costs for companies also play a role. Buiting therefore advises the cabinet not to further increase the burden on entrepreneurs. “I would be very cautious about that, because we also see in these figures that margins are under strong pressure,” Buiting continues. ‘They have been like that in recent years, but the pressure has increased. And that will only continue to develop.’
Profit also under pressure
Logically, the profits of companies and entrepreneurs are also under pressure, while they are declining. ‘That also applies to next year. The worrying thing about this is that investments are also under pressure.’
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Buiting states that things have not actually gone very well since corona. Then an investment gap of 20 billion euros arose, which is only growing further thanks to all kinds of challenges. Digitization and sustainability, among other things, entail many costs for the business community. ‘How can that be financed? Especially if you also want future financial growth?’
Of the companies surveyed, only 1 percent indicate that the higher costs can be fully passed on. That percentage remains low for a reason, Buiting points out. “There are many reasons for this,” he says. ‘You often have to deal with long-term contracts with customers, which make it difficult to pass on prices at once. In addition, you cannot simply increase the price of certain products – no one buys croissants for 7 euros. There is simply a maximum on how prices can be passed on.’
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He emphasizes that while the percentage of companies that can fully pass on the higher costs is small, the percentage that can pass on most of the higher costs can reasonably pass on. “But they are also dealing with a loss of margin,” he concludes. ‘Compared to three-quarters of entrepreneurs who can only partly pass on the costs. That’s where the blows fall when you look at the profits.’
#Entrepreneurs #confidence #future