Industry is disappearing from Europe. According to the latest data, industrial production fell by 0.3 % month-on-month in July and by 2.2 % year-on-year. And just to avoid speculation that it is only Europe that is going down economically, I would add that all the major economic zones of the world, including the US and China, are experiencing a quite substantial decline in efficiency. Chinese equities have fallen to their lowest level since January 2019, a mere mirror of the fact that investors have already lost faith in China's economic recovery and in the growth of corporate profits there.
As different as the three big zones - Europe, the US, China - are, the reason for their declining economic performance is the same in all three cases. It is the deep state, the increasing interference of the state in the economy and the suppression of the private sector and spontaneous innovation. Where the state does not allow the private sector to breathe, where the private sector, instead of doing business and making profits, has to fill in carbon footprint reports that it sucks off its finger, there comes decline, as in Europe. But decline also comes where developers have to build by the state in order to achieve the five-year
planned ghost towns like China. And the decline is coming even where blackouts are proliferating because stable power plants have been shut down and electric cars have been ordered, as in California.
Europe, surprisingly, is aware of its lagging behind. But it either does not understand at all, or outwardly pretends not to understand its origins. Indeed, the European Commission has just presented a comprehensive new report on European underdevelopment under the leadership of former European Central Bank Governor Mario Draghi. Now hold on. It says that 'to make the EU more competitive, it is necessary to promote industrial decarbonisation and innovation'. It says €800 billion a year in debt should be enough to do this. ( https://commission.europa.eu/topics/strengthening-european competitiveness/eucompetitiveness-looking-ahead_en )
The economist doesn't know whether to laugh or bang his head against the wall in despair. Europe's decline is due to green ideology, and it says here that to stop falling behind we must strengthen green ideology and decarbonise. It is the unrealistic efforts to decarbonise, which physically cannot succeed, that are the main cause of the economic decline. Yes, I am talking about economic decline, although I am aware that the statistical figures show economic growth for Europe. But yesterday, in my comment, I talked about the broken window effect and the fact that not all GDP growth has to mean growth in prosperity - and that is exactly the situation we are in in Europe now.
Draghi's remarks on the need for common debt are similarly desperate: "The EU should continue to issue common debt instruments to finance common investment projects aimed at increasing the EU's competitiveness and security," Draghi said. It is the same as having a compulsive slot machine player in your family and, instead of cutting him off from money, you give him the family money to buy food for his slot machine spending.
We can already measure the result of this scorched earth policy, or rather green earth policy, very well. A survey by the German Chamber of Industry and Commerce has shown that, because of fears about the impact of the energy policy there, the number of companies considering cutting production or moving abroad is growing rapidly. The situation is particularly dramatic among large companies. Respondents from around 3 300 German companies took part in this survey. Almost half of all German companies with high electricity costs are already planning or have even
to reduce production or to move abroad where it is cheaper. This is 7 percentage points more than last year. Among German energy-intensive industrial companies with more than 500 employees, the situation is the most dramatic. A total of 51 percent of companies are considering cutting production or moving abroad. A fifth of companies are postponing their investments in research and development, and overall two-thirds of German industrial companies are concerned about
future competitiveness.
Markéta Šichtařová Director of Nextfinance s. r. o. nextfinance.cz
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