The European Union’s economy is increasingly falling behind the United States and China in terms of technological advancements, and the German automotive industry is at the heart of this problem. Despite allocating nearly half of Europe’s research and development funds, Germany has mainly focused on improving combustion engine vehicles, which are yielding diminishing returns.
Meanwhile, the electric vehicle market, dominated by Tesla and Chinese companies, has been neglected by Germany. This crisis is also affecting Central and Eastern European countries like Poland, Slovakia, and Hungary, which are heavily reliant on the German automotive industry.
The German labor market is facing additional challenges. An aging population and a shortage of skilled workers, particularly engineers, are contributing to the slowing down of the economy. The lack of technical competencies is not being fully compensated by immigration. Furthermore, high energy and labor costs, as well as complex regulations, are pushing German companies to consider relocating abroad, with 40% of industrial companies seriously contemplating relocation.
The European Union as a whole is struggling with underinvestment in its companies. Europeans are increasingly investing their capital in the US or saving it in bank accounts, where it is eroded by inflation. As a result, productivity in European tech companies has stagnated, while in American companies, it has increased by 40% since 2005.
European companies are also losing out on stock markets. The capitalization of Wall Street has more than tripled since 2005, while European stock exchanges have only seen a 60% increase. Christine Lagarde, President of the European Central Bank, has emphasized that Europe is lagging behind global powers in developing key future technologies. According to Politico, Europe has not even started the race.
The European economic model is losing its strength. Productivity is growing slowly, and the difference in GDP per capita between the EU and the US has doubled since 2000, reaching 30%. Europeans spend less time at work than Americans, and US companies spend more than twice as much on research and development. While innovation expenditures in Europe were supposed to increase, they are actually stagnating, and funds are often misallocated. The economic crisis in the EU is becoming increasingly visible, and the next few years will be crucial for rebuilding its position in the global technological race.
Statistics:
* Germany allocates nearly half of Europe’s research and development funds.
* 40% of industrial companies in Germany are considering relocation due to high energy and labor costs and complex regulations.
* Productivity in American tech companies has increased by 40% since 2005.
* The capitalization of Wall Street has more than tripled since 2005.
* The difference in GDP per capita between the EU and the US has doubled since 2000, reaching 30%.
* Europeans spend 20% less time at work than Americans.
* US companies spend more than twice as much on research and development as European companies.
Sources:
* European Central Bank
* Politico
* World Economic Forum
* German Federal Statistical Office
* Eurostat
Keywords: European economy, German automotive industry, electric vehicles, technological gap, innovation, research and development, productivity, GDP per capita, labor market, investment, stock markets.
