21 Chief Economists Outlook Energy prices are a key factor here, which in turn means that Europe will be particularly exposed owing to the impact of the war in Ukraine. According to one recent estimate, the rate of increase of European input costs is set to outpace those of other advanced economies by as much as 20 percentage points from this year, threatening the competitiveness of the region’s producers and running the risk of diverting supply chains and business activity away from the region. 29 The results are less definitive for the other potential business headwinds that respondents considered. Talent shortages were cited by 45% of respondents as being somewhat or extremely likely to exert a drag on business activity, a slightly lower proportion than the 55% who were neutral or viewed it as unlikely to have an adverse business impact. In part, this may reflect the fact that global labour market conditions vary widely, and while there may be some markets where conditions are exceptionally tight – in the US, there are currently 1.7 job openings per unemployed person 30 – this is not the case more widely. Additionally, as businesses look towards cost-cutting measures, talent availability is expected to be a lower-order concern. Asked about regulatory and policy uncertainty, a lower proportion of respondents (36%) said that they expect this to exert a drag on business activity, compared to the 63% who were neutral on the question or who disagreed that there would be an adverse impact. Efforts by policy-makers to restore some level of policy certainty after the turbulence of the last years have been relatively effective. Finally, when it comes to the business impact of supply chain disruptions in 2023, only 23% expect a significant effect on business activity, while 50% consider it either somewhat unlikely or extremely unlikely that there will be a significant adverse impact, reflecting significant stabilization after COVID-19 restrictions and integration of war-related disruptions in business planning. 29 Economist Intelligence Unit, October 2022. 30 Bureau of Labor Statistics, January 2023.