Optimism among French business leaders remained steady amid worries about a possible recession and rising energy costs, according to JP Morgan’s second annual survey

PARIS–(BUSINESS WIRE)– As last year, more than half of French medium-sized business leaders feel optimistic about the global (58%), national (56%) and local and regional (55%) economic outlook in the coming year, according to the second annual survey France Business Leaders Outlook JP Morgan which was published today. This is despite 53% expecting a recession in 2023 — a lower rate than their European counterparts in the UK (69%) and Germany (59%) — and bracing for its consequences.

“The challenges that French mid-sized and high-growth companies have faced over the past few years have prepared them to face increased uncertainty in the coming year,” said Olivier Simon, head of commercial banking, France and Benelux, JP Morgan. “Business decision makers continue to demonstrate their ability to quickly adapt to and overcome global and local challenges.”

In a survey of more than 250 senior executives from French medium-sized companies, business leaders continue to demonstrate their confidence and resilience. Despite many bracing for a recession in 2023, nearly three-quarters (72%) plan to maintain or increase headcount in the coming year, more than two-thirds (68%) of French medium-sized business leaders still expect revenue and sales to increase, and six out of ten (61%) predicts profit growth.

“Many French companies have had to adapt to today’s environment of high inflation and other external pressures,” said Kyril Courboin, head of France, senior government officer, JP Morgan. “Although they have practical expectations of real threats to come, French business leaders remained quite optimistic with business growth expectations.”

Responding to inflation and navigating supply chain challenges

As inflation remains the biggest challenge facing the business community globally, more than half (56%) of French business leaders have experienced an increase in costs as a result.

  • The influence of a business leader: Of those facing the challenges of inflation, two-thirds (67%) said that the increased cost of raw materials, as well as the increased cost of energy (62%) are driving higher costs of doing business.
  • Answer from a business leader: To compensate, most managers (70%) report recouping up to half of their increased costs by passing them on to the consumer. Of these, 85% are likely to continue to increase prices for their consumers in the coming year.

Additionally, many business leaders also report ongoing supply chain challenges, with 63% saying it has worsened in the past 12 months.

  • Nearshoring: In response, 35% of French medium-sized business leaders continue to move production to new areas, and more than 30% are now adding new suppliers from new areas, a trend that has accelerated somewhat since 2022.
  • Other adjustments: Slightly more business leaders (38%, up 5% from 2022) are also increasing allocations to cover higher costs associated with moving products, while a similar share are changing materials or production processes.

Overcoming energy uncertainty, the biggest challenge for the French business community

A third (33%) of French business leaders see energy prices as the main external threat, which is still the highest among their European counterparts: the UK (25%) and Germany (23%). As a result, companies that highlighted energy prices as their biggest external threat plan to invest in renewables (69%) in the coming year.

Responding to the challenges of the labor market and solving urgent social and environmental problems

French decision-makers continue to navigate a complex labor market and labor shortages, with the majority expecting to increase (41%) or maintain (31%) the number of employees over the next 12 months.

To help retain and attract talent, business leaders respond to employee expectations:

  • Increase in wages and benefits (46%)

  • Providing flexibility of working hours and location (43%)

  • Investment in automation technology (43%)

  • Offers flexible working hours (42%)

Corporate social responsibility also remains a priority for the leaders of French medium-sized companies, which place increasing importance on environmental factors such as reducing carbon emissions, waste management and energy efficiency (54%, up 21% from 2022), especially in light of the current energy crisis and conservation strategies being introduced across France. In addition, 44% claim that focusing on energy and environmental factors has enabled their company to establish or strengthen its position within the community, followed by improving marketing and finding new customers (43%).

The work of the year ahead

In the coming year, decision makers are focused on expanding into new markets — domestic and international (46% and 42% respectively) — as well as prioritizing profitable products and services (40%) and introducing new products (32%).

In addition, the majority of French business leaders have a full or partial transition plan, with one-third planning to transition into a family (50%, up 10% from 2022) or sell to a third party or sales management group (33%). A large majority (67%, up 23% from 2022) expect these transitions to occur within the next two years.

For more information on the outlook for French business leaders in 2023, visit jpmorgan.com/business-outlook-FRA.

Survey methodology

The JP Morgan Business Leaders Outlook survey was conducted online from November 21 to December 8, 2022. A total of 254 business leaders (CEOs, CFOs, CFOs and owners) from French medium-sized companies (annual revenues ranging from EUR 20 million to EUR 2 billions) in various industries. The results are within the statistical parameters for validity, and the error rate is +/- 6.2% with a confidence level of 95%.

About JPMorgan Chase

JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services company headquartered in the United States of America (“US”), with operations around the world. JPMorgan Chase had $3.7 trillion in assets and $288 billion in equity as of September 30, 2022. The company is a leader in investment banking, consumer and small business financial services, commercial banking, financial transaction processing and asset management. Under the JP Morgan and Chase brands, the company serves millions of customers in the US and many of the world’s most prominent corporate, institutional and government clients worldwide. Information about JPMorgan Chase & Co. are available at www.jpmorganchase.com.

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