Description
Uncertainty and trade disruptions caused by a series of geopolitical upheavals over the past decade continue to shake global trade and production models. The European Union has learned from recent shocks, and a variety of stabilising factors can already help EU firms, which have been exposed to trade tensions. The companies themselves have shown resilience and have been able to react swiftly.
This study, conducted by the European Investment Bank in collaboration with the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW), looks at firms’ exposure to trade tensions over time and at their ability to react against an ongoing cascade of geopolitical shifts and global disruptions.
Some key findings:
- EU firms have been investing in digital tracking to strengthen their supply chains. In their pursuit of resilience, efficiency and security, they have also been diversifying their supply chains and adding new sourcing countries.
- Trade within the European Union cushions importers against trade tensions: Extra-EU importers, or firms importing from outside the European Union, were more exposed than intra-EU importers to disruptions in logistics (22% vs. 14%) and limited access to raw materials (18% vs. 15%) and semiconductors (10% vs. 7%).
- EU firms are striving to decarbonise their supply chains. Nearly half of EU traders already monitor their carbon emissions, and 30% say they plan to take steps to reduce emissions in the next three years.
- Digital and innovative firms are more agile and better able to react to shocks.
- Access to finance and active policy have helped companies respond to shocks and sustain investment in key strategies to improve their resilience.
In an uncertain global landscape, the European Union remains a beacon of stability for investors and trading partners. The challenges might be great, but so are the opportunities.
