The latest research on corporate travel in Europe’s biggest economies shows some signs for optimism. But Stanley Slaughter urges caution with continent’s financial crisis far from over
The publication of the GBTA Foundation report “Outlook – Western Europe” last week is a welcome addition to our knowledge and understanding of business travel on the continent. Other companies and/or organisations publish similar in-depth analyses of business travel but this takes a slightly different angle.
It is more an analysis of overall business travel rather than who flies where and with whom. For example, it looks at how much of a country’s business travel is domestic compared to overseas. US travel managers have enjoyed such a take on statistics for several years so hopefully those this side of the Atlantic will benefit in a similar way, not least in having figures which could help with setting budgets for the coming years.
The report looks in-depth at five of the main European countries, the UK, Germany, France, Spain and Italy, which account for 70 per cent of spend on the continent and at three others, Ireland, Greece and Portugal more superficially. However Paul Tilstone, GBTA’s chief global development officer and also currently its managing director for Europe, hopes to extend this to cover the Nordic countries and, possibly, the Benelux countries at a later date.
That said, the report itself was not one to raise much of a cheer among those in the business travel industry in western Europe. The continuing failure of the European economy to pull itself free of the deep recession triggered by the banking crisis in 2008 has ensured that uncertainty has become imbedded. This has made predicting the future even more fraught than usual.
But what is immediately striking about the report is that the business travel spend of four of the “Big Five” - Germany, France, Italy and Spain - has never regained the level enjoyed in 2008. Only the UK has recovered to this extent which the GBTA attributes to the country’s “diversified economy and the flexibility of having its own currency and monetary policy.”
At the moment, spend in Germany is inching up with the GBTA forecasting a 0.6 per cent rise this year compared with 2011. (GBTA predicts a rise this year for Britain of 0.7 per cent). But for France, Spain and Italy the outlook is grimmer, with respective declines in spending of 0.6 per cent, 4.1 per cent and 5 per cent predicted for 2012. While France is expected to see a return to growth of 5.1 per cent in 2013, spending in Spain and Italy, both of whom are struggling financially, is expected to decline further next year.
What these figures also emphasise is what has become accepted knowledge since 2009, that the southern European countries have in general weathered the economic storm far less well than those in the north. But far from being a cause for complacency in Berlin, Paris or London, this is a worry for the entire continent.
As Tilstone points out, European countries are extremely dependent on each other for trade. It might be indicative that France which has very strong trading links with Spain is faring less well than the UK and Germany whose links are less strong.
Given the current uncertainty, the GBTA reports that things are likely to get better in 2013. This is a bold - not to say rash - prediction. It is still not 100% certain if Greece will stay in or leave the euro. With the EU’s propensity for short-term solutions, this uncertainty could endure for months. If Greece does leave, few economists can honestly say they know what the effects will be.
And if Greece returns to the drachma, will other nations, similarly under the cosh of austerity, decide to follow its lead and return to their old currencies as well? This is as much an unknown as what the possible consequences would be. Even the GBTA acknowledges that its forecasts of growth in Germany are based “on the assumption that the European continent can avoid an all-out banking crisis.” If Germany, the strongest European economy, is vulnerable to such future crises, the weaker countries must inevitably be so as well.
But as Tilstone says, an increase in business travel is often an indication that things are picking up. If there are grounds to believe that business travel spend in 2013 is going to rise by 5.4 per cent in Germany, 5.1 per cent in France and 4 per cent in the UK, let us hope that these ‘green roots’ exist even they are not yet visible.
This forecast improvement is both in terms of these nations’ GDPs and, perhaps more significantly, of the volume of their exports. But you don’t sell much to countries which are bankrupt or where demand has dropped through the floor. And where this is the case, there is not much incentive to board a train or aircraft to seal a new contract.
Overall, it is a grim picture. The blanket uncertainty hanging over Europe, allied with severe austerity under which many of its countries continue to struggle, cautions against optimism. Let us hope the GBTA is calling it right.