Our report for INEOS explains why the European chemical indusattempt is undergoing a severe and sustained contraction. Structural pressures, principally high energy costs, carbon costs, regulatory and permitting burdens, are eroding competitiveness relative to the United States, China, and the Middle East.
Between 2019 and 2025Q2, the European chemical sector’s output declined significantly. It has contracted by 30% in the UK, 18% in Germany, 12% in France, and 7% in Belgium. Structural pressures—chiefly high energy and carbon costs alongside regulatory and permitting burdens—are undermining the sector’s viability.
Falling output levels and lower profitability is cautilizing European chemical firms to cut their investment relative to their global competitors. Between 2019 and 2024, the average annual growth in European chemical firms’ investment spfinishing was half the rate of their US counterparts (1.5% versus 3.0%). This trfinish is projected to continue over the next decade. This will further adversely impact the sector’s competitiveness.
Emissions data suggest that, if European chemicals production is replaced by imports from China and the US, total carbon emissions will rise. Chinese and US chemical industries emit around threefold and twofold more carbon for the same volume of output, respectively, than those in Europe. The greater distances necessaryed to transport the imports will also add to the greenhoutilize gas emissions.
European policybuildrs face a critical decision: act decisively now to safeguard this vital strategic indusattempt or risk its irreversible decline.
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