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Without a Strong Industrial Base, Europe’s Economy Cannot Prosper

While industrial performance has stabilised, industry’s share in Europe’s GDP has declined from 15.5% of GDP one year ago to 15.1% in summer 2013. The two industrial Competitiveness reports published today by the European Commission highlight that Member States have made progress in improving the business environment, exports and sustainability.

Without a strong industrial base, Europe's economy cannot prosper

However, many problems still remain. The convergence between industrially most competitive countries and the moderate performers is at a standstill. Moreover, the cost of energy is increasing in almost all Member States, contributing to the de-industrialisation of Europe. Big roadblocks are also access to finance and a drop in investment in almost all Member States. For European industry to start flourishing again, the performance of public administration needs to be significantly improved as well as the link between schools and companies. Further efforts should be made to boost innovation close to the market.

Europe 2020 is the framework for growth in the EU. The Commission has consistently tabled initiatives in various fields to create growth and jobs. Vice President Antonio Tajani emphasised today that Europe needs a strong industrial base to achieve Europe 2020 goals. Manufacturing has strong spill-over effects on the rest of the economy and especially on overall productivity. 80% of private innovation, ¾ of export and a substantial role in jobs creation come from industry.

European Commission Vice President Antonio Tajani, Commissioner for Industry and Entrepreneurship, said: “We remain a long way from the 20% target for 2020 as put forward by the Commission in 2012. The Commission has taken several initiatives to address high energy prices, difficult access to credit, drop in investments, lacking skills, and red tape. And we will come forward later this autumn with an industrial initiative to go further and boost action in this field. This should be a catalyst in view of the February 2014 European Council in order to significantly strengthen the growth- and competitiveness for industry. The Commission will submit its contribution to the European Council in the next few weeks”

State of European industry

There are worrying developments in two essential areas for any economy: productivity and employment. The EU’s productivity performance is once again deteriorating in comparison to the United States, while unemployment continues to be an everyday reality for 11% of Europe’s workforce. Industry has been hit particularly hard having lost over 3.8 million jobs since 2008.

The main results of the two reports are:

Positive points:

  • Exports have been the main driver of industrial activity; the EU has been outperforming the U.S and Japanese. Europe delivered a € 365 billion trade surplus in 2012, equivalent to about a billion euros per day.
  • Innovation performance has improved since 2008, but convergence seems to have ended since 2012;
  • Business environment has improved in most Member States but so it has in the rest of the world;
  • Most Member States have improved the skills base of their workforce.

Weak points:

  • Investment remains stubbornly low;
  • High energy prices pose a significant problem for industries;
  • Access to finance has deteriorated in many Member States;
  • For some Member States, improving the efficiency and effectiveness of public administrations is the key to restoring growth.

Namely, the reports suggest the following priorities:

  • Making it as simple as possible for businesses to carry out their daily business;
  • Reducing the costs of producing in Europe, (e.g. energy and raw materials);
  • Improving access to finance and capital markets for companies, particularly SMEs;
  • Opening markets for European companies both within the internal market and in third countries;
  • Facilitating investments into new technologies and innovation, focusing in particular on 6 priority areas identified in the 2012 Industrial Policy Communication;
  • Making sure that the skills and availability of Europe’s work-force matches the needs of the 21st century economy.

Sectoral dimension of the EU’s approach to industry

Europe is the world leader in a number of industrial sectors and most of these include diverse value-chains in which flagship corporations are linked to a host of small- and medium sized enterprises. The Commission has already proposed a set of policy measures for strategic sectors, such as automotive, steel, security and defence.


Industrial policy will be high on the European agenda in the next 6 months. The Competitiveness Council on 26th and 27th September will kick off the political debate in the run-up to the February 2014 European Council on industrial competitiveness and growth, which will provide a unique opportunity to define the course for supporting economic growth and the real economy at the highest political level.

More information:

MEMO/13/815: Competitiveness report 2013: no growth and jobs without industry

MEMO/13/816: Industrial competitiveness of EU member states: some progress made, but many challenges still lay ahead

More information on the general Competitiveness report

Monitoring progress in the Member States