A leading European commentator and former associate editor of the Financial Times, Wolfgang Münchau, has shamed Brussels about the eurozone’s recovery lagging behind the UK since Brexit.
According to the Eurointelligence director Wolfgang Munchau, the EU’s economic area is getting “weaker” at each crisis it faces, failing to ever recover in time for the next one.
However, Mr Münchau points out private companies are increasingly moving to invest in the UK, the US and also Japan.
“Since today’s investment is tomorrow’s growth, this is bad news” for the EU writes the commentator in the Eurointelligence report.
Mr Münchau also slams the bloc for failing to take a lead in hybrids and electric cars, one of the main sources of private-sector investment in Europe.
The news comes on the day British marque Bentley announced its first-ever Battery-Powered Electric Vehicle (BEV) will be developed and built in the UK with the company committing to investing £2.5 billion in sustainability over the next ten years.
Since leaving the EU, the UK has primed itself as a key place for battery production, as seen with Nissan’s new £1 billion electric vehicle hub and battery gigafactory in Sunderland.
UK start-up, British Volt has also announced the creation of an all-purpose gigafactory in Northumberland while another £2.5 billion automotive battery production facility near Coventry is also being built in the West Midlands.
A consortium of seven UK-based organisations have also signed a memorandum of understanding to combine ambitions to develop world-leading prototype solid-state battery technology, targeting automotive applications.
Plus the Government also last year announced a multi million pound fund for the Faraday Battery Challenge which is supporting seventeen British projects making electric vehicle (EV) batteries safer, more powerful, cheaper, faster-charging and easier to recycle.
Ben Kilbey, Chief Communication Officer at BritishVolt said the UK is primed to become a “powerhouse” in solid-state battery production – a more efficient and effective battery than conventional competitors.
“Solid-state technology is in its infancy but it is the holy grail.
“The UK could become a global battery powerhouse in the industry.
“We aim to partner with academia to make sure the UK is at the vanguard of electrification.
“It’s very possible the UK will be at the forefront of the industry if we act now.
“UK plc has the opportunity to be at the forefront of electricity and technological advancement.
“It will put us in the middle of the global battery map.”
In stark contrast Mr Münchau says Europe is lacking innovation. His report reads:
“At the beginning of the pandemic, we all speculated about whether the recovery would be V-shaped, or whether it would follow the shape of the Nike logo. For euro area investment, the actual pictures looks rather different: like an inverted square root sign, where the lines goes sharply down, then half-way up, and then moves to the right. As Robin Brooks has pointed out, euro area consumption has recovered well, in line with other G10 countries. But investment is lagging behind the UK, Japan and the US.
“It is possible that the recovery fund will make a dent. The data do not yet reflect its full impact. But we think you will need a microscope to see its effect. Given its small size, we doubt you will see its effect in the data.
“Politically, the weak investment numbers will strengthen the French-Italian case for exempting investment spending from the stability pact. The public sector clearly plays a role in terms of its own contribution to investment. But the bulk of all investment in the economy comes from the private sector. There are only so many roads and bridges you can repair. Maybe you can accelerate the network of motorway charging stations, or as we wrote above, create a strategic gas reserve? And then what? There has been no austerity during this crisis. Those poor numbers reflect mostly what has been happening in the private sector.
“These data also confirm something we have observing: that with each crisis the euro area economy weakens. It displays what economists call hysteresis effects, on a macro level. In the past, such effects were often observed in relation to long-term unemployment. In each recession people lost jobs, but not all regained work when the recession ended. What seems to happen here is that each crisis leaves the euro area structurally weaker. We have been arguing that this is not primarily the result of macroeconomic policies, although the austerity years did large and persistent damage.
“The main reason for what we are seeing right now is Europe’s lack of innovation. All the action on artificial intelligence is the US and China, and to some extent the UK. The Europeans are doing better in robotics, but the Japanese are the world leaders in this area. And the car industry, one of the main sources of private-sector investment in Europe, has failed to take a lead in hybrids and electric cars. Environmental technologies offer a chance. So does hydrogen. It is not game over yet. But most of the innovators in Europe are in the north. The euro area’s problems won’t be fixed by fudging the fiscal rules.”