The fundamental problem EU faces is that energy costs in Eurozone are much higher than in US or China. This makes manufacturing uncompetitive. This is leading Europe to rely more on imports while exports are now dropping.
You can see here how manufacturing sector in Europe got destroyed after the war started. Industrial PMI under 50 indicates a contraction, and it's been steadily contracting for the past three years.
The only solution here would be to either start creating state owned industry or to do massive subsidies for companies to start creating domestic industry. Neither option seems to be possible under the current system.
Oof, that's brutal. Manufacturing and other industrial production is the major user of electricity, accounting for very roughly 1/3rd of use. Increased costs of basic inputs is not something you can just "work around" - it just fundamentally means of a loss of productivity for your nation's industrial sector.
I can imagine articles coming out in a few years about how this was somehow a boon because it drove new initiatives in efficiency... similar to what we hear now about how Covid supply chains shook things up. But really, they could have done that at any time, it doesn't really change the fact that they're working from a higher baseline costs for their inputs.
The only solution here would be to either start creating state owned industry or to do massive subsidies for companies to start creating domestic industry. Neither option seems to be possible under the current system.
Massive industrial policy to expand electricity generation is one of the many needed things. And they are doing that, I'm somewhat impressed by how quickly they're moving to get transmission lines set up from power generating regions. But I'm impressed just in the sense that they're making the best out of a situation where they've tied their own hands behind their backs, restricting themselves just to just a narrow set of tools. This is really such a fabulous example of how western governments have blinders on and can't even imagine what's possible. The EU is so rich with capital and has incredibly productive workers, but it constantly steers itself into icebergs that it can see from a mile away.
For sure, this was an elephant in the room for years, and they just paid lip service to energy transition. Now it's becoming a crisis, so Europe has to start getting serious about it. Of course, all of that would be much easier if the EU didn't keep antagonizing China who could easily help Europe make this happen.
and it'll only get worse with tariffs under Trump
It might not, an unpopular and rude guy doing the same shit might force the EU into action. I'm not very optimistic, but it could happen.
The fundamental problem EU faces is that energy costs in Eurozone are much higher than in US or China. This makes manufacturing uncompetitive. This is leading Europe to rely more on imports while exports are now dropping.
You can see here how manufacturing sector in Europe got destroyed after the war started. Industrial PMI under 50 indicates a contraction, and it's been steadily contracting for the past three years.
https://tradingeconomics.com/euro-area/manufacturing-pmi
The only solution here would be to either start creating state owned industry or to do massive subsidies for companies to start creating domestic industry. Neither option seems to be possible under the current system.
Oof, that's brutal. Manufacturing and other industrial production is the major user of electricity, accounting for very roughly 1/3rd of use. Increased costs of basic inputs is not something you can just "work around" - it just fundamentally means of a loss of productivity for your nation's industrial sector.
I can imagine articles coming out in a few years about how this was somehow a boon because it drove new initiatives in efficiency... similar to what we hear now about how Covid supply chains shook things up. But really, they could have done that at any time, it doesn't really change the fact that they're working from a higher baseline costs for their inputs.
Massive industrial policy to expand electricity generation is one of the many needed things. And they are doing that, I'm somewhat impressed by how quickly they're moving to get transmission lines set up from power generating regions. But I'm impressed just in the sense that they're making the best out of a situation where they've tied their own hands behind their backs, restricting themselves just to just a narrow set of tools. This is really such a fabulous example of how western governments have blinders on and can't even imagine what's possible. The EU is so rich with capital and has incredibly productive workers, but it constantly steers itself into icebergs that it can see from a mile away.
For sure, this was an elephant in the room for years, and they just paid lip service to energy transition. Now it's becoming a crisis, so Europe has to start getting serious about it. Of course, all of that would be much easier if the EU didn't keep antagonizing China who could easily help Europe make this happen.