European private businesses’ biggest challenge is the increasingly growing skills shortage that is preventing them from hiring the right talent for growth. A PwC survey across 31 European countries shines a spotlight on a wider, ongoing issue across the region. PwC estimates that the skills shortage is costing the region €414 billion annually in lost revenues - just from private businesses. That’s around 2.6%of European GDP and is more than the combined annual GDP of Greece and Portugal.

Peter Englisch, EMEA Entrepreneurial and Private Business Leader at PwC, the skills shortage in Europe has become an even bigger structural issue for private businesses. “Recruitment and staff management is crucial to the future success of any firm. But given the current environment, it’s more important than ever to find people with the right skills, or at least the potential to upskill,” he noted.

The survey also found that overall, private businesses across Europe continue to expect growth over the next 12 months however this optimism is markedly decreased since last year. In 2018, 65% of private businesses expected growth compared with just 57% this year.

Mark Smith, EMEA Clients & Markets Leader at PwC, notes that companies that see digital transformation as the key to unlocking the next stage of growth – and get the implementation right- have a fighting chance of growing faster when the next upturn comes.”

65% of survey respondents recognise that digitalisation will impact the long-term viability of their businesses. This is an increase on last year when only 31% cited digitalisation as a priority. The survey’s findings suggest that many company leaders see digitalisation as a technical fix to solve specific issues in areas such as supply chains. However, there are benefits to viewing it as a holistic strategy to transform an entire company – especially at a time when the economic cycle demands reinvention and renewal in preparation for the next era of growth.

Commenting on the findings, Peter Englisch, stressed that many more private businesses in Europe now recognise the importance of having a strategy for digital transformation however many are still just at the initial stages of digitalisation. “Digital transformation is disrupting every corner of the economy and private businesses are no exception. The time to act is now to ensure they can minimise the risks and capitalise on the opportunities of digitalisation,” he concluded.