Why the environment is becoming negative for industry in the euro zone

For numerous reasons, we believe that euro-zone industry is going to contract further. This is because: After the COVID crisis, companies are going to try to produce in regions where production costs are low to restore their profitability; production costs are high in the euro zone; The return to regional value chains will discourage industrial investment in the euro zone due to the outlook of weak demand growth in the zone; The euro zone’s stringent climate regulations discourage industrial investment in the zone, as long as they are not offset by an EU CO 2 border tax; Major industrial sectors that form a large share of euro-zone industry (automotive, aerospace) face enduring problems .