The European Commission wants to give Europe’s manufacturing sector a new push.
Brussels tabled last week (4 March) a proposal for an Industrial Accelerator Act, which aims to strengthen industrial capacity across the continent, speed up the shift to cleaner technologies and reduce strategic dependencies on other regions.
Manufacturing remains central to the EU economy. The sector accounted for 14.3 per cent of the EU’s GDP in 2024, according to Commission figures. Yet its economic weight has gradually declined: in 2000, manufacturing represented 17.4 per cent of the bloc’s economy. Policymakers now aim to reverse this trend, with a broader goal of raising manufacturing’s share of GDP to around 20 per cent in the coming decade.
At the same time, the sector faces mounting pressures. European manufacturers are dealing with high energy prices, global overcapacity, rising costs linked to decarbonisation and new technologies, relatively low investment compared with other regions, and regulatory hurdles.
Europe’s industrial belt
Against this backdrop, a key question emerges: where in Europe is industry still strongest today?
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In several Central and Eastern European economies, manufacturing represents a particularly large share of the economy. In countries such as the Czech Republic, Slovakia and Poland, the sector generates close to one-fifth or more of the total value added. These economies have become deeply integrated into European industrial supply chains, especially in sectors such as automotive, machinery and electronics.
Germany also stands out as one of Europe’s most industrialised large economies. Manufacturing accounts for a significantly larger share of its economic output than in most other Western European countries, reflecting the country’s strong export-oriented industrial base, particularly in the automotive sector.
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By contrast, the role of manufacturing is less significant in many service-oriented economies. In countries such as France, Greece and Luxembourg, industry represents a noticeably smaller share of total value added. These economies rely more heavily on services such as finance, tourism and public administration.
The map therefore reveals a clear geographical pattern: a strong industrial belt stretching across Central Europe, surrounded by more service-based economies in parts of Western and Southern Europe.
Industry still employs millions
However, the economic weight of manufacturing tells only part of the story. Employment offers another perspective on the European industrial landscape.
Manufacturing still provides jobs for tens of millions of people across the European Union. According to Eurostat, industry remains a major employer particularly in Central and Eastern Europe, where manufacturing accounts for a comparatively large share of total employment. Factories and supply chains continue to be a significant source of jobs.
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Countries such as the Czech Republic, Hungary, Poland and Slovakia stand out for their high industrial employment shares. Manufacturing is deeply embedded in these economies’ regional labour markets and closely tied to European supply chains, especially in sectors such as automotive production, machinery and electronics.
By contrast, a smaller proportion of workers are employed in manufacturing in many Western and Southern European countries. The importance of manufacturing to national economies does not always translate directly into employment. In many advanced economies, industrial production has become increasingly capital-intensive and automated, meaning that factories can generate substantial economic output with a relatively smaller workforce.
Why industry (still) matters again
Following decades of gradual decline in the manufacturing sector’s share of the economy, European policymakers are increasingly focused on reindustrialisation and strengthening the continent’s production base.
At the same time, the nature of industry itself is changing. The transition to climate neutrality is reshaping manufacturing through investments in cleaner technologies, electrification and new energy systems. This transformation is expected to create new industrial ecosystems while putting pressure on traditional sectors to decarbonise.
Geopolitics is also reinforcing the strategic importance of industry. Supply chain disruptions, global competition and concerns about technological dependence have pushed Brussels to prioritise domestic production capacity in key sectors.
Policy will not suffice when it comes to Europe’s capacity to expand its industrial base. Many factors will come into play, including where manufacturing capacity already exists, and where new investment is directed in the coming years or where the right skills can be found.
- Author: Maria Markus, Euranet Plus News Agency
