The European industry is in the doldrums. According to a recently published report, ‘hundreds of billions extra’ are needed to save the European economy. The situation at Volkswagen and Mercedes-Benz is exemplary: both car manufacturers are struggling with falling profits due to strong Chinese competition. In the long term, there are fears for Europe’s competitive position, especially now that Trump is the new American president.

However, it is not all bad news. The Dutch economy continued to grow in the third quarter of this year. Consumers continue to buy new things, despite high inflation. Wages are currently rising faster than prices, which is increasing consumption. In fact, the Dutch economy grew faster than that of the US, something that does not happen often.

Change is needed 

Yet dark clouds are hanging over the European economy. Flourishing international trade, cheap energy from Russia and American guarantees for European security have always made the growth of the European economy possible. These three factors have become uncertain in recent times or have even disappeared completely. This has a negative impact on European industry. According to top economist Draghi, three major changes are needed to secure the future. Less regulation should ensure more innovation, substantial investments should secure access to energy and international cooperation should guarantee European security.

However, this is easier said than done, which means that European industry is having a hard time. In China and the US, there are far fewer barriers to innovation, which means that products from those countries are increasingly competing with European products. More and more production is in danger of disappearing from the EU, especially now that Donald Trump has won the American elections. His plan to introduce high import duties will further reduce the appeal of European products. This is of course bad news for international trade. European industry is a major buyer of countless products from home and abroad. The future prospects of trading companies are therefore closely linked to those of industry.

Within the EU, people are aware of the need for measures, but all member states must be on the same page for this. This is currently not the case. Moreover, some developments can no longer be stopped. For example, Trump's plans will lead to higher inflation, probably around 4% in 2025. This will have a direct negative impact on European trade and there is probably no one who can talk Trump out of this intention.

Uncertain future

The future of the European economy is therefore extremely uncertain. Threats are lurking from various angles. As a trading company, it is important to keep a close eye on the situation to avoid surprises. There is a good chance that 2025 will yield fewer business opportunities than last year. Fortunately, there are also reasons for some optimism. The Dutch economy is doing very well for the time being and the EU has been preparing for a new Trump presidency for months. The idea is that this will ensure that the (economic) situation in the EU remains more stable than during Trump's previous term. But whether that will succeed, only the future can tell.