By Michalis Psilos

 

The energy crisis and inflation have made things very difficult for the European economy. According to German economist Marcel Fratzscher, "five risk factors could plunge the eurozone economy into a deep recession": The escalation of the conflict in Ukraine, energy supply problems, a disruption in supply chains, a global trade slump and inflation, which will cause a contraction in purchasing power.

 

President of the Institute for Economic Research (DIW) since 2013 and Professor of Macroeconomics at the prestigious Humboldt University of Berlin, Marcel Fratzscher warns that if adequate alternatives to Russian natural gas are not been found, “industry in Europe will face great difficulties. Some companies could be forced to stop production."

 

A lot of large businesses are even considering moving overseas—especially to American soil—to take advantage of the high subsidies offered by President's Biden, Inflation Reduction Act (IRA). How seriously should this concern be taken?

 

Today's figures do not, of course, indicate that the "death" of entire branches of European industry is imminent. Nevertheless, there is no hiding the fear that EU deindustrialization could become a reality in 10 to 15 years. "In the short term, however, Fratzscher tells Handelsblatt, that "deindustrialization is very unlikely. At the moment there are good reasons why deindustrialization is extremely unlikely in the next two or three years. First, we are not currently seeing a wave of corporate bankruptcies. Although many smaller companies may have closed, a large part of the economy is remarkably resilient."

 

 

Already, in Europe, Intel presented an investment program of 80 billion euros. Centered in Germany, in the former East German state of Saxony-Anhalt, this investment program will also cover Belgium, Spain, France, Ireland, Italy and Poland.

 

In France, STMicroelectronics and its partner GlobalFoundries, presented an investment plan of 5.7 billion euros for the factory in Crolles, near Grenoble. These investments that contribute to growth and employment, in fact, at a time when all economic observers agree that money has become more expensive, as interest rate hikes by the ECB are not over.

 

In France, Nicolas Dufourcq, general manager of the Banque Publique d'Investissement (Bpifrance), emphasizes that an increase in state investment is needed to strengthen the re-industrialization of Europe. Several private initiatives will be able to rely on this will of the state.

 

For example: The association Arts & Métiers Business Angels (AMBA) founded in 2008 by engineers, former students of the School of Engineering "Arts et Métiers ParisTech", helps everyone who wants to invest in innovative companies by providing them with know-how. This Association has financed the start-up of 130 industrial start-ups. AMBA is not the only Association working in this area. But all small streams, make great rivers.