Research Briefing | Jul 26, 2023

Structural and cyclical headwinds cause industrial recession in Eurozone

We now expect industry in the eurozone to remain in a mild recession in H2 this year after output already contracted in H1.

What you will learn:

  • Eurozone industry has proven even more resilient than expected over the past year. Output is currently only around 1% below last year’s level despite the war in Ukraine, elevated energy prices, and rapid policy rate hikes.
  • In our latest baseline forecast, we expect output will trend sideways in the coming quarters. But we will make some further cuts in our next update given the adverse near-term impact of cyclical and structural challenges.
  • Global monetary policy tightening is the key headwind weighing on demand this year. Structurally higher energy prices also add pain for energy-intensive firms.
  • Intermediate goods makers face a very weak outlook this year and next. For intermediate goods, the sharp reversal of the huge post-pandemic inventory cycle adds to the challenge as supply bottlenecks ease and costly-built stocks become expensive to finance.
Back to Resource Hub

Related Services

Post

Funding the Future: The UK’s energy transition in a global context

This report commissioned by Energy UK investigates what governments around the world have done to attract investment in clean technologies and what this means for the UK as it considers its next steps in the energy transition.

Find Out More

Post

Net Zero Scenario: How France, China, and the US compare

Using our Industry Climate Service, we explore the ways a net zero scenario can impact industrial sectors across countries with reference to three representative examples: China, France, and the United States.

Find Out More

Post

US industry ROI boosted by technology spending

US private sector return on investment (ROI) is near 20-year highs, boosted by commodity price strength and business spending on technology. The rising return from previous investments is one factor recently supporting US industry capex in the face of higher costs of capital.

Find Out More