The chemical industry is the best leading-indicator for the wider economy. And the European industry has been warning for some time that Europe is facing a crisis.
Sadly, the warning is now becoming mainstream, as the headlines confirm:
- AFP report “Germany’s economy shrank for a second straight year in 2024, official figures showed Wednesday, with little hope of a speedy recovery as Europe’s traditional powerhouse is also mired in political crisis”
- Bloomberg report “A heavy discount continues to plague French assets, and Prime Minister Francois Bayrou’s attempt to tackle the ongoing political crisis has been far from enough to bring investors back. Their return requires a concrete plan to slash the country’s gaping budget deficit”
One major problem area, of course, is the auto industry. It, like chemicals, is central to the economy. And VW, Europe’s largest car company, has been left behind in product development as Bloomberg notes:
“The manufacturer’s deliveries risk slumping again because its namesake VW brand doesn’t have a new electric car coming in 2025. Key products have been pushed back amid delays developing software. The problems are starkest in China, where manufacturers led by BYD are dominating with affordable electric and hybrid models. In the US, where President-elect Donald Trump is threatening tariff hikes, VW still doesn’t offer any pickup trucks popular among American consumers.”
GERMANY AND THE UK TELL A SIMILAR STORY OF DECLINE

New data from Germany and the UK highlights the crisis, as the Sky charts and analysis show:
Germany: “Both the chemicals sector and the wider energy-intensive manufacturing sector have seen large falls in output in the past few years”
UK: “The implosion of the UK chemicals sector continued in November. Cumulative fall in output since 2021 is now 38%. It’s further evidence of continued UK deindustrialisation, in the face of high energy prices”
As Ed Conway, Sky News’ economic editor highlights:
The chemicals sector, one of the mainstays of the British economy for decades, has contracted by more than a third over the past three years. Deindustrialisation is happening. Accelerating, even. Europe is deindustrialising, and fast.
EUROPEAN POLICYMAKERS NEED TO TAKE BOLD DECISIONS, QUICKLY

Last week saw a very timely, and urgent report published by Europe’s chemical sector group, CEFIC. As the Introduction states, the chemicals industry is fundamental to everyday life and to the economy:
“For the sake of our industry and the 1.2 million workers it directly employs, we need bold and urgent action today. Lowering energy costs, ensuring access to critical raw materials, and fostering innovation are absolutely critical. If our industry falls, entire value chains fall with it: healthcare, automotive, renewable energy, and the breakthrough Green Deal technologies that are essential for the transition. We say it again, louder and clearer: for the future of Europe, we need our new EU decision makers to act now!”
- A predictable and simplified regulatory environment
- Accelerating access to finance
- Improving skills
- Open trade ensuring resilient supply chains
Time is not on Europe’s side. Hopefully, this crisis will now lead policymakers to take the urgent actions that are now essential.