Growth optimism amongst Belgian private businesses has fallen at almost twice the rate of European counterparts

Brussels - 20 August 2020 – PwC’s latest European Private Business Survey shows that Belgian businesses are seeing major impacts in the wake of the COVID-19 pandemic. Just 6% of Belgian respondents surveyed in February and March 2020 expected revenues to decline; in June 2020 that number jumped to 67%. At the same time, growth expectations amongst Belgian firms has slumped to just 11%. Although PwC’s research shows that agility is paying off in improved performance, less than a third (28%) of Belgian respondents is adapting their business model following the COVID-19 pandemic - significantly less than the European average.

PwC’s European Private Business Survey polled over 2,400 private and entrepreneurial businesses across 31 European countries and found that growth expectations amongst Belgian firms surveyed had slumped to just 11% (June 2020), down from 78% in February-March 2020. Growth expectations amongst companies in the other surveyed countries had fallen over the same period by ‘only’ 36 percentage points (from 55% in February-March to 19% in June 2020). Nonetheless, 39% of Belgian respondents feel they’ve managed to cope with the impact of COVID-19 better than their competitors, a slightly higher estimation than their European counterparts (30%).

Although Belgian businesses are having to reduce costs to cope with this situation and protect their liquidity, it is also reassuring that entrepreneurs in Belgium are looking for new sources of income, increasingly using new technologies (67%) and investing in innovation (50%) to differentiate their companies. Remarkably, just 28% of Belgian respondents indicated changing their business model, highlighting a significant gap compared to half of the EU-31 countries raising this as an action.

Griet Helsen, Entrepreneurial and Private Business leader Belgium at PwC Belgium: “The COVID-19 pandemic has accelerated the need for companies to really transform their businesses. Companies need to take a fresh look at everything from operations, through digitalisation to the product portfolio. With market environments changing fast, new business models in addition to the core business can be vital. They provide a basis for changing and pivoting when circumstances force businesses to do so and the core businesses cannot continue, or are no longer profitable, for whatever reason.”

COVID-19 intensifies skills gap

For Belgian entrepreneurial companies, the biggest threat to business development in the coming period is a lack of skilled employees (72%), which is significantly higher than the EU-31 average of 55%. The study confirms that the pandemic has intensified the skills gap. More than seven in ten admit that their flexibility to respond to disruptions, including pandemics, is limited mostly by lack of key talent.

Other risks to business development in the coming period are digitalisation and speed of technological change (56%), climate change and environmental challenges (50%) and supply-chain disruptions (44%). Remarkably, the coronavirus was mentioned by just 11% of those interviewed, the same level as access to affordable capital.

For companies to be successful in the ''new normal'', it first depends on whether they can guarantee the hygienic safety of their employees (100%), according to the surveyed Belgian private companies. Other challenges they face are initiatives to achieve societal objectives such as diversity or equality (89%) and the efficient use of teleworking opportunities (83%).

“More openness towards work from home models is proving to be one of the positive trends in recent months. To make this shift successful, it's important to ‛humanise’ remote work so that employees feel comfortable in the new environment. Training and upskilling can play a key role. It’s also not surprising that societal objectives are gaining attention. Companies are increasing their focus on local sourcing and making international value chains sustainable. That is only going to increase and the most agile companies are already ahead of the curve in adopting these issues into their planning”, explained Griet Helsen.

‘Agility champions’ invest in upskilling and technology

In the research conducted by PwC there was a focus on so-called “agility champions”. “These are companies that use a strategic approach to maximize resilience and make clear choices with regards to their workforce and cost reductions. At the same time, these companies continue to invest in the key areas that keep their business competitive, including training, upskilling and new technologies” comments Griet Helsen.

This research also shows that agility champions are doing more to prepare their workforce for the future at the same time – 57% of global agility champions say they are training and upskilling workers, compared to just 40% of laggards. Two-thirds (66%) of agility champions say they are enhancing their working capital management as part of their response to the recent crisis, compared with just 45% of laggards. While it may be tempting to slash technology investments as a quick way to cut costs, the majority of agility champions (58% compared to 41% of laggards) are actually increasing their use of new technologies. Both expanding into new markets or client segments (58%) and exiting markets that don’t prove profitable (57%) are seen as critical to success in the future by the majority of agility champions. 

Read the full findings at www.pwc.com/epbs2020