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Business believes Merkel win would strengthen euro zone economy

Sean Gallup | Getty Images

Top business people around the world hope that German Chancellor Angela Merkel will retain her grip on power, believing her re-election would strengthen the euro zone's economic prospects.

Germans go to the polls on September 22 and, elsewhere in the EU, controversial issues such as working towards a euro zone banking union look like they are being put on hold, reflecting reluctance to take any major policy decisions until the poll result is known.

Of more than 1,500 business people polled in the FT/Economist Global Business Barometer quarterly survey, more than 60 percent said Ms Merkel's re-election would make them more confident about Europe's economic prospects. Only 16 percent said it would make them less confident, with the rest saying they did not know.

(Read more: Merkel moonlights as history teacher)

However, while global business regards Ms Merkel as a safe pair of hands, German industry has recently warned the government that the economy needs more investment, and less consumption, to return to full health.

While the euro zone economy grew for the first time in six quarters in the three months to June, just 7 percent of respondents declared the euro zone crisis over. Eighty-three respondents said the turmoil in the region still raged.

Economic and market risk, along with political risk, remained the main threats cited by executives.

More from the Financial Times:
Executives optimistic over outlook for global economy
France setback threatens eurozone recovery
Obama injects optimism into trade deal

More than a third of those polled voiced concern about the prospects of an economic slowdown in China, although almost half said they expected it to have no impact on their business. Fears have eased that growth will disappoint in the world's second-largest economy, after production and investment figures published last week were better than expected.

Only 7 percent of respondents said they were very worried about the impact on their business and investments of the US Federal Reserve's plans to start slowing its $85bn of monthly bond purchases in the autumn, should the economy continue to recover. However, more than two-fifths said they were a little worried about the Fed heading for the exit, which has pushed up global bond yields in recent months.

(Read more: Is Germany in 'cloud cuckoo land' over Greek debt?)

A slightly higher proportion of executives surveyed expressed cautious optimism that the global economy would continue to recover compared with those who believed it would deteriorate. Twenty-seven per cent expected conditions to improve in the six months ahead, against 25 per cent who expected the outlook to worsen. The rest thought conditions would stay the same.

The figures are similar to those recorded for the May poll and continue the positive trend that began earlier this year, when executives were more upbeat on the global outlook than gloomy for the first time since mid-2011.

In expectation of a pick-up in conditions, more than a third said they would increase their capital expenditure in the six months ahead, compared with only 18 per cent that planned to invest less.

Canada was still seen as the most business-friendly economy, followed by the US, UK and Germany. Executives regarded Brazil as the best of the leading emerging markets. Russia ranked bottom again.

Executives responded to the poll between July 9 and August 12.

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