The crisis in the automotive sector will accelerate the euro zone’s deindustrialisation

The euro zone is already deindustrialising due to the decline in demand for industrial products, offshoring to emerging countries, insufficient modernisation among industrial companies in the euro zone and hiring difficulties in industry. We believe that the euro zone’s deindustrialisation is going to accelerate due to the contraction in the automotive sector, which is resulting from the rapid transition from combustion engine vehicles to electric vehicles, the batteries for which are produced almost exclusively in Asia. The resulting loss of value added and employment in the automotive sector is a sizeable macroeconomic shock that risks sharply accelerating the euro zone’s deindustrialisation.