EU Industrial Production Struggles for Momentum Amid Crises and Structural Challenges

Industrial production across the European Union expanded at an average annual rate of just 0.6 per cent between 2000 and 2024, according to new data, highlighting the sector’s modest long-term performance amid a series of economic shocks and persistent structural issues.

In the early 2000s, the picture was considerably more optimistic. Eurostat reported that the EU recorded an average growth rate of 2.0 per cent during that period, with several member states achieving significantly higher levels of industrial expansion. However, this momentum was sharply interrupted by the global financial crisis of 2007 and 2008, which marked a dramatic turning point in the trajectory of European industry.

During the financial crisis, many EU countries experienced double-digit contractions in industrial output, including those that had previously demonstrated robust growth. This collapse severely disrupted progress and left lasting scars on the sector.

In the aftermath, the period between 2010 and 2019 saw a gradual recovery in industrial production. Yet, the pace of growth remained subdued compared to pre-crisis levels. “Overall growth during this post-crisis period was roughly half the pre-crisis average, reflecting continued structural challenges in many EU economies,” the data show, painting a picture of sluggish recovery hindered by deep-rooted economic obstacles.

The sector was dealt another major blow in 2020, when the Covid-19 pandemic caused a sharp 7.4 per cent decline in industrial production. This dramatic drop was driven by widespread disruptions to global supply chains and a collapse in demand across multiple industries.

Despite some level of recovery in the years following the pandemic, industrial output continued to decline annually by 0.4 per cent from 2021 to 2024. These figures underscore the lasting impact of the crisis and the fragility of the EU’s industrial base.

At the national level, Ireland emerged as the standout performer, posting the highest average growth rate in industrial production over the 24-year period, with a robust 5.6 per cent annually. Poland followed with a strong 4.9 per cent, reflecting the country’s dynamic manufacturing sector and its growing export competitiveness.

By contrast, some member states have seen a prolonged decline. Italy and Portugal recorded the weakest performance in the EU, with average annual declines of 1.1 per cent and 0.9 per cent respectively, “underscoring longer-term deindustrialisation trends.”

The data reveal how major economic shocks—including the global financial crisis and the pandemic—have reshaped the industrial landscape across Europe. These events, coupled with structural headwinds, continue to weigh heavily on the sector’s recovery and long-term outlook.

By fLEXI tEAM