Europe’s economy is growing much more slowly than that of the US or China, according to estimates. What is Europe doing wrong? To this question, Fredrik Persson, president of Business Europe, answered that “energy is the key to getting Europe back on track”. He explained that big businesses are leaving Europe because of too high energy prices.
Economical growthPhoto: Andrii Yalanskyi / Panthermedia / Profimedia
- The European Central Bank has estimated for Europe a growth of 0.6% in 2023 and forecasts 0.8% in 2024, says Euronews.
- In contrast, the United States’ GDP grew at an annual rate of 3.3% in the fourth quarter of 2023, and China’s economic growth in 2023 is estimated at 5.2% in 2023, according to World Bank estimates.
- The president of Business Europe says three main topics need to be addressed when discussing the economy’s low growth and stalled competitiveness: energy, regulation and free trade.
Fredrik Persson: Big business is leaving Europe because of energy prices
The cost of energy has put Europe at a disadvantage, Business Europe President Fredrik Persson said in an episode of Euronews Business’ The Big Question. He explained that the price of energy has increased greatly due to the invasion of Ukraine by Russia. Even though they have decreased over the past year, current levels are still too high. “So we are losing to our competitors from the US and Asia,” said Fredrik Persson.
If the energy cost issue is not resolved, we will continue to see businesses such as BASF, the world’s largest chemical producer, leaving Europe for better prices, says the president of Business Europe.
“Now they decide to invest 10 billion euros in China, despite the challenges of political risks in China and distance,” said Fredrik Persson.
Excessive regulation hurts businesses: We get a new regulation every two days
New Eurostat data shows that small and medium-sized enterprises (SMEs) account for more than 99% of companies in the EU.
Fredrik Persson talks about over-regulation in Europe. “We are so keen in Europe to regulate things. For example, in the last five years we have had almost 100 new laws that have been passed at European level, which means that they add 5,000 new pages of regulations to companies. Practically, it means that we currently receive a new regulation every two days”.
“For a big company, this is a hassle, but they have structure, they have departments to deal with it. But if you are an SME – what happens to them? Either they go out of business, or they decide not to enter a new market”.
The president of Business Europe hopes for less but more effective regulation. “If we do that, I’m sure, then Europe will be back on top,” says Persson.
Fredrik says that without change, the outlook for Europe is bleak. He praised the U.S. advance in the technology sector, which helped boost growth over Europe.
Business Europe represents 36 national business federations in Europe, from EU member states, Great Britain and Ukraine.
