The European Union’s industrial performance is falling behind that of its global competitors, according to the European Commission.
Industry’s share of EU gross domestic product is declining. In the past year it has fallen from 15.5% to 15.1%.
“We remain a long way from the 20% target for 2020,” said Antonio Tajani, the European commissioner for industry and entrepreneurship.
The Commission’s annual report on industrial competitiveness, issued yesterday (25 September), reveals manufacturing giving way to services in the EU economy, while in China manufacturing has risen sharply. Particularly disquieting is the widening of the productivity gap between the EU and the US, after years of narrowing.
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The report identifies the high cost of energy as a major impediment to industrial competitiveness in Europe. Another roadblock is access to finance – there has been a drop in investment in almost all member states, leading to underinvestment in ICT and stunted digital growth. Europe also lags behind the rest of the developed world in commercialisation of research.
An industrial strategy for reviving Europe’s declining industry was scheduled to come out this month, but has been delayed to December because many Commission departments wanted to comment. A meeting of the European Council in February 2014 will focus on industrial competitiveness and growth, and a competitiveness council is being held today (26 September) in Brussels to prepare for it.
The Commission report was accompanied by an industrial performance scoreboard underlining how success is geographically divided by its economic performance, with Northern Europe doing best, Southern Europe performing moderately, and Eastern Europe still trying to catch up. The rate of convergence between best and worst performers has slowed to a standstill.
At the same time, northern countries including Germany, Finland and France have seen their performance fall, while Poland, though still with industrial competitiveness lower than the EU average, has improved its performance significantly over the past year. “Even though we have different backgrounds, different degrees of industrialisation, different industries, everybody agrees that we’re not going to get out of the crisis unless we support the real economy,” said Tajani.
The industrial sectors in Europe that are best-performing in terms of competitive advantage in world trade include printing, tobacco, beverages, pharmaceuticals and motor vehicles – a list notable for its low representation of hi-tech sectors.
Gerd Götz, director-general of the European Aluminium Association, said that much of what is holding European industry back is overburdensome regulations. “The Commission is in the process of concluding a fitness check that will assess the cost impact of regulatory measures faced by Europe’s aluminium industry,” he said.
“The aluminium industry in Europe has been severely affected over the last decade, [so] we are expecting the EC to announce urgent measures soon.”