EU firms have boosted investment in digitalisation, energy efficiency and supply chain diversification, according to a report from the European Investment Bank (EIB).
The organisation’s Investment Report 2023/2024: Transforming for Competitiveness was released alongside the second edition of the EIB Group Forum, being held this week in Luxembourg.
According to the EIB, the European economy came strongly out of the pandemic, but then faltered in the second half of 2023. The future, it added, would be once of continued pressure from slower growth and challenges to competitiveness across the continent. It also said the economy will be dampened by the transition towards net zero.
“After the pandemic, co-ordinated fiscal support from national governments and EU institutions proved critical, underpinning Europe’s economic resilience and spurring the public and private investment needed to transform and modernise the economy,” said the EIB. “Some progress has been made in digitalisation, energy efficiency, decarbonisation and building up the resilience of supply chains.”
The pace of change needed to accelerate, it added, however – even as investment becomes harder to sustain. “To remain competitive in a sustainable way, the European Union and its members should focus on improving productivity, encouraging innovation, addressing skill gaps, scaling up new technologies, and supporting young, dynamic firms.
“To stay ahead, Europe needs to invest in bolstering supply chains, given the emerging challenges of deglobalisation, such as protectionist policies and insecure trade routes. It needs to transform its economy, making it more digital and less dependent on fossil fuels.”
‘Cause for concern’
While investment in the European economy has been “resilient”, said the EIB, it also highlighted that a gap of 1.5 percentage points in productive investment remained between the continent and the US. Even though Europe, it says, showed little sign of falling behind, the continual gap was a “cause for concern”.
The report made no mention of the growing unrest across Europe, as evidenced recently by strikes in France and Germany. In Berlin a few weeks ago, for example, farmers closed huge parts of the city centre with a tractor protest that clogged up main roads while school strikes have been prevalent across Germany of late, and the country has seen the longest train strike in history. That strike also affected services – and six of the 11 main routes for freight across Europe pass through Germany.