Brussels, 25/09/2013 (Agence Europe) - EU member states may have made progress in improving the business and export climate but their industrial competitiveness is struggling because of high energy prices, poor investment and difficulty in accessing funding. Worse, convergence is at a standstill. The manufacturing sector, which the Commission would like to see account for 20% of GDP by 2020, currently contributes only 15.1%.
The two annual reports (2013 editions) on EU competitiveness - one on European industrial competitiveness and the other on the performance of each member state - published by the Commission on Wednesday 25 September present a very mixed picture, acknowledged Commissioner Antonio Tajani.
While industrial performance has stabilised, industry's share in Europe's GDP has declined, from 15.5% to 15.1% in a year. Concerned at this relative decline of the role of industry in EU GDP, Tajani proposed in the autumn of 2012, as part of an updating of Community industrial policy, which is not really a policy as it is not an area exclusively reserved to the EU, urgent measures to take the share of the secondary sector in EU GDP from under 16% to 20% by 2020. Wednesday's figures make it clear that the EU has a long way still to go.
For European industry, there are worrying developments in two essential areas: productivity and employment. EU productivity performance is again deteriorating compared with the United States, while unemployment continues to be an everyday reality for 11% of Europe's workforce. Industry has been particularly hard hit, having lost over 3.8 million jobs since 2008.
For a year, recovery in the manufacturing sector has been very uneven. The member states and industrial sectors have been recovering at different rates from the deepest post-was crisis. Only a few countries have managed to return to pre-crisis production levels (Estonia, Latvia, Lithuania, Poland, Romania and Slovakia), most are still well below previous levels. With the exception of the sectors producing basic necessities and a few high tech sectors, most areas of industry are still struggling to recover. Domestic demand remains weak, recovery has been largely stimulated by external demand (in particular, for pharmaceutical products, metallic minerals and transport equipment). More worrying still is that EU manufacturing output is losing ground globally, while China's is gaining.
While highlighting improvement in the business climate and the skills base in most member states, an increase in exports which has boosted industrial activity (with a trade surplus of €365 billion in 2012, the EU is doing better than the United States and Japan) and improvement in innovation and sustainability performances since 2008, the reports make clear that the EU's industrial competitiveness faces serious problems.
Energy prices, rising in virtually every member state, are a major problem for industry, contributing to the relative decline. Investment has not improved with the measures adopted by the EU since the start of the crisis in 2008. Access to funding has become more difficult in several member states. And the effectiveness and efficiency of public administrations could still be improved.
Convergence between countries is at a standstill. Based on their performances in a number of key areas (innovation and sustainability, business climate, services and infrastructure, public administrations, finance and investment, and skills), the competitiveness scoreboard ranks member states in three groups which appear fixed: those which perform well in all areas of competitiveness (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Spain, Sweden and the United Kingdom); those which perform well in some competitiveness areas but face difficulties and deterioration in others (Cyprus, Greece, Italy, Malta, Portugal and Slovenia); and those which face significant challenges in many areas, but are quickly improving (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia).
The Commission continues to argue for a strong industrial base, despite industry's falling contribution to GDP, because manufacturing has strong spill-over effects on the rest of the economy and especially on overall productivity. Each euro of added final demand in manufacturing generates around 50 cents of additional final demand in other sectors of the economy.
Among its priorities, the Commission places “significantly” improving the performance of public administration, strengthening links between education and business, putting more into encouraging innovation and commercialisation of its results, facilitating day-to-day business activities, reducing production costs (energy and raw materials), improving access for companies, both large and small, to financial markets and capital and to non-EU markets, and facilitating investment in new technologies and innovation corresponding to the needs of the 21st century economy. In other words, nothing particularly new. (EH/transl.fl)