FES Just Climate’s Post

A list of Europe's economic shortcomings is a reminder of the strength that underpins the U.S. economy. The man credited with saving Europe from one crisis now says it faces another. Countries are falling behind; he says the union must become more like America to catch up. "For the first time since the Cold War, we must genuinely fear for our self-preservation," Mario Draghi, a respected technocrat who served as Europe's top central banker as well as Italy's prime minister, told reporters this week. The European Commission tapped Draghi to diagnose Europe's economic problems. One year later, he returned with over 300 pages of findings and proposals designed to help the EU compete with the U.S. and other global peers. An American reading the report might notice that Draghi uses the U.S. economy as the main example of what European nations should emulate as they seek to jumpstart growth. Roughly a third of startups founded in Europe since 2008 that went on to be unicorns — those valued at $1 billion or more — left the bloc, with the majority coming to the U.S. The report says the U.S. is home to 22 of the 50 companies with the world's biggest research and development budgets. Europe has 12. Draghi calls out Europe's "weak innovation" in AI. Over 70% of AI models built since 2017 are from the U.S., while 15% stem from China. Dynamism All six of the most valuable companies in the U.S. — all of which are worth more than $1 trillion — have been created in the last 50 years. By contrast, no European company valued at more than $100 billion has been started in that period. America has tilted toward protectionism and embraced tariffs. That has scrambled longstanding global trade dynamics — and Europe has not adjusted. "China relies on the EU to absorb its industrial overcapacity," says Draghi, while the U.S. is disentangling itself from reliance on China. "If the EU does not act, we risk being vulnerable to coercion," Draghi says. At one point, he recommended tariffs and trade measures when warranted to "level the playing field" in some sectors. Draghi praises legislation like the Inflation Reduction Act. Similar measures in Europe are too "fragmented" across the European Union's 27 countries to pack a similar punch, he writes.

The German #economy began recovering at the beginning of 2024 and has developed better than initially expected. A sharp rise in #construction #investment, albeit more of a flash in the pan as a result of mild winter weather, along with strong goods #exports helped the economy onto its recovery path and masked the disappointing development of private #consumption, which sank unexpectedly. However, #consumer sentiment has since brightened considerably: Following the recent special payments, employees in many sectors are now earning more on a permanent basis due to pay raises, which increases income security. In conjunction with the #inflation rate now being stable at below the three-percent threshold, real wages are rising significantly. Added to this is the turnaround in interest rates initiated by the Europäische Zentralbank, which is making saving less attractive and loans more affordable. In addition to private consumption, foreign trade will prove to be the second mainstay of the German economy in the forecast period. On the one hand, imports are increasing as the domestic economy becomes stronger. On the other hand, the German export #industry will also experience a significant boost, as industrial production is likely to pick up worldwide. Due to the high share of intermediate products and investment goods, exports “made in Germany” are particularly dependent on the global industry’s economic situation. In Germany, too, industrial companies will begin investing more in their capacities from 2025 at the latest. Construction investment will then also rise again. Overall, the outlook is somewhat more positive than it was in the spring: Instead of stagnating, DIW Berlin now expects the German economy to grow by 0.3 percent in 2024 and by 1.3 percent in 2025. In addition, the tug-of-war over the next federal budget could once again become a factor contributing to uncertainty, possibly even more so than was already to be expected after the results of the #EU elections in Germany. The global economy will also gain some momentum over the forecast period. The euro area is finally overcoming its weak phase for good and international trade is picking up speed. The interest rate turnaround in the major advanced economies will likely have a positive effect on residential construction and corporate investments from the second half of 2024. Overall, the global economy is expected to grow by 3.7 percent in 2024 and by 3.6 percent in 2025. https://lnkd.in/eQrZbBBB The economic outlook was written by the Forecasting and Economic Policy team of DIW Berlin - German Institute for Economic Research: Geraldine Dany-Knedlik, Guido Baldi, Nina Brehl, Angelina Hackmann, Pia Huettl, Frederik Kurcz, Laura Pagenhardt, Marie Rullière, Jan-Christopher Scherer, Kristin Trautmann et.al.

Surveys released on Thursday reveal that companies in the euro zone's two largest economies, France and Germany, are growing increasingly pessimistic, amplifying concerns about the bloc's sluggish recovery. The euro zone has struggled to sustain its post-pandemic economic rebound, trailing behind the United States due to factors such as less generous government investment, a technological deficit, and reliance on imported raw materials. In July, the business climate in France and Germany unexpectedly worsened, with entrepreneurs adopting a bleaker outlook for the coming months. These findings come a day after a separate survey indicated stalling growth in the euro area. Such readings cast doubt on the euro area's modest rebound, which hinges on a recovery in real income and stronger exports, and could bolster calls for further rate cuts by the European Central Bank. Concerns also loom over the automotive industry, which may be holding back investment due to lower-than-expected electric vehicle uptake and potential U.S. tariffs if former President Donald Trump wins the upcoming election. The Ifo institute's business climate index for Germany, based on a survey of around 9,000 managers, fell for the fourth consecutive month, missing analyst expectations. In France, manufacturers reported weakening demand, particularly from abroad, and morale in the services sector deteriorated to its lowest level since April 2021, according to the national statistical office Insee. Despite recent snap parliamentary elections delivering a hung parliament in France, Oxford Economics' Riccardo Marcelli Fabiani noted that the drop in demand largely reflects political-related uncertainty, highlighting the economy's fragility. European shares plummeted to their lowest in over two months amid disappointing corporate earnings. Notably, Europe's automobile shares fell by 2.3%, with Stellantis dropping 8%, and the luxury goods sector declined by 2% to a six-month low. Although the ECB, which held rates steady last week but is anticipated to cut them in September, may find some reassurance in data showing easing wage expectations and labor scarcity in the French manufacturing sector, the picture remains mixed in services. On a positive note, ECB data indicated a moderate rebound in loans to companies, suggesting a potential turning point in the credit cycle due to lower interest rates. #EuroZone #EconomicRecovery #BusinessClimate #France #Germany #ECB #InterestRates #Manufacturing #ServicesSector #Exports #EconomicOutlook https://lnkd.in/dZVyYre2

A tale of two economies: USA is good Europe has major structural and Demographic issues. Europe needs a radical economic rethink. Yes I’m bullish on USA! 🇺🇸 Ireland 🇮🇪 Poland 🇵🇱 and Spain 🇪🇸 future growth will also be good too in these. I would get money out of High Tax Low growth rest of Europe. ESP. UK, Germany France and Italy! Their economies are broken, politics in wilderness and demographics of Italy and Germany are absolutely catastrophic. Infrastructure is very poor in UK too. Heath costs will rise taxes will rise and there will be cuts to quality of services and infrastructure maintenance to pay for the aging populations. One to watch is US consumers migrating and spending overseas. Get prospecting! #Economicoutlook #Economics #Europe #USA #Glassball #Crystalballs

According to a common narrative, the EU economy increasingly lags behind the American one. But when we look at the EU/US growth data the right way, it becomes clear the narrative's just wrong. Such is the conclusion of an insightful analysis by Bruegel. When we adjust per-capita output for purchasing power standards - which proponents of the false narrative often fail to do - the EU has narrowed the gap with the US in the past two decades. And in terms of GDP per hours worked, the EU has converged with the US even more. (Europeans just like to work less and play more!) Some EU countries, such as Austria and Denmark, are more productive than America. So, it turns out, we should in fact be asking: why is the EU economy doing so well despite its many notorious weaknesses? https://lnkd.in/eiiqhk8Z

Germany and France, the economic engines of Europe, find themselves in a precarious situation as recent data reveals alarming contractions in their manufacturing and services sectors. With Germany's composite PMI plummeting to 47.2 and France's at 47.4, both nations are staring down the barrel of recession. The challenges are multifaceted: Germany grapples with fierce global competition while France's political instability under a minority government raises further doubts about economic recovery. Far-right movements gaining traction signal a significant public discontent and potential upheaval. We must ask ourselves: are these downturns merely temporary blips, or do they reflect deeper, systemic issues? As we navigate this uncertain landscape, businesses must adapt to a world where fragmented globalization may reshape markets and trade dynamics. The implications of these economic indicators and political shifts will be felt far beyond their borders. How prepared is your business to face these challenges?

  An unusually clear warning was issued by The International Monetary Fund (IMF). Germany and Austria should dress warmly.⚠️   According to the IMF, the 𝐆𝐞𝐫𝐦𝐚𝐧 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐰𝐢𝐥𝐥 𝐨𝐧𝐥𝐲 𝐠𝐫𝐨𝐰 𝐛𝐲 𝟎.𝟐% in 2024, while the global economy will grow by 3.2%. Germany thus brings up the rear among the leading G7 industrialized nations, while Austria's competitiveness is even worse.   The prospects are even gloomier in the long time. Reasons according to the IMF? 👇   ▶️geopolitical tensions ▶️Decline of the working population ▶️Growth inhibiting investment hurdles ▶️Decreasing willingness to consume   The IMF points out that the 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐢𝐧𝐠 𝐮𝐬𝐞 𝐨𝐟 𝐀𝐈 could make many traditional jobs redundant, while putting further pressure on public finances.   In my view, globally technology-driven productivity gains especially threaten the technology-sceptical and geopolitically increasingly irrelevant EU. 🔔   𝐄𝐮𝐫𝐨𝐩𝐞𝐚𝐧 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭𝐬 𝐡𝐚𝐯𝐞 𝐛𝐞𝐞𝐧 𝐰𝐚𝐫𝐧𝐞𝐝 𝐛𝐲 IMF chief Kristalina Georgieva to be too accommodating to farmers, as excessive state support would be at the expense of budget consolidation in the face of already high public debt.   SMEs should expect reduced state aid and prepare for possible cuts. The IMF explicitly recommends:   ⏯️Cost cutting, including along the supply chain; ⏯️International diversification, including foreign locations; ⏯️Investment in technology, including AI; ⏯️Covering skilled workers; ⏯️Flexibility and adaptation of business models; ⏯️Increase of agility.   Global investments to protect companies and shareholders are expensive, but financial resources are available. My father Harald Pöttinger stands for corporate finance and is happy to support you!   #unemployment #growth #ki #state finances #costs Melvin Huwer Turnkey Finance GmbH Alpine Group

Austrian and German companies should prepare for difficult times. In good time! ⚠️   𝐍𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐟𝐚𝐜𝐭𝐨𝐫𝐬 are continuously increasing. Companies should respond to this with a package of measures and not trust the reflexive promises of European politicians.   Among other measures, the International Monetary Fund explicitly recommends foreign direct investment including internationalization for SMEs. Traditional financing therefor is often difficult.💡   However, alternative financial instruments and financing partners offer attractive opportunities. We offer investment banking services including direct investments. 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐟𝐢𝐧𝐚𝐧𝐜𝐞 𝐢𝐬 𝐨𝐮𝐫 𝐰𝐨𝐫𝐥𝐝!   #unemployment #growth #ai #StateFinances #costs Alpine Group Melvin Huwer Harald Pöttinger Angela Pöttinger Andreas Pöttinger

Austrian and German companies should prepare for difficult times. In good time! ⚠️   𝐍𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐟𝐚𝐜𝐭𝐨𝐫𝐬 are continuously increasing. Companies should respond to this with a package of measures and not trust the reflexive promises of European politicians.   Among other measures, the International Monetary Fund explicitly recommends foreign direct investment including internationalization for SMEs. Traditional financing therefor is often difficult.💡   However, alternative financial instruments and financing partners offer attractive opportunities. We offer investment banking services including direct investments. 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐟𝐢𝐧𝐚𝐧𝐜𝐞 𝐢𝐬 𝐨𝐮𝐫 𝐰𝐨𝐫𝐥𝐝!   #unemployment #growth #ai #StateFinances #costs Turnkey Finance GmbH Melvin Huwer Harald Pöttinger Angela Pöttinger Andreas Pöttinger

The EU economy saw a much-needed upswing in the first quarter of 2024, growing 0.3 percent compared to the last quarter of 2023. Though the expansion might seem marginal, it’s a definite improvement from the 0.1 percent contraction experienced in each of the previous two quarters.