BRUSSELS: Companies like DuPont, General Electric and Nomura remain cautious about the outlook in Europe, where falling foreign investment may lead to the loss of over €500bn in potential revenues.
According to a study by McKinsey, the consultancy, annual investment levels in the 27 countries in the European Union fell by €350bn from 2007–11, a drop some 20 times greater than that of consumption.
This "unprecedented weakness", McKinsey's report argued, will result in €543bn in lost revenues which would otherwise have been generated between 2009 and 2020.
Ian Hudson, president, Europe, Middle East and Africa at DuPont, the chemicals firm, told the Financial Times that "anti-business rhetoric" among some government leaders was particularly unhelpful.
"Business and government need to collaborate to face the challenges of the future ... There are many regulatory burdens that must be addressed," he said. "If it takes longer to create a business, to build a plant ... in Europe versus elsewhere around the world, then Europe is, of course, at a disadvantage."
As an example of the issues facing the region, Ford, the automaker, closed a plant in Genk, Belgium, last year. General Motors, its rival, did the same to a factory in Bochum, Germany.
Dow Chemical, the US group, is also shutting down units from Belgium and the Netherlands to Spain and the UK. GE, the conglomerate, is undertaking a $2bn cost-cutting drive, with Europe a key area of focus.
"Europe is going to be slow-growth for a long time. If they allow a bank to bust like what happened here in September 2008, it could be worse. So count on Europe being slow," Jeff Immelt, chief executive of General Electric, said in May last year.
Equally, Hewlett-Packard, the IT group, is cutting 8,000 jobs across the region, while Kimberly-Clark, the personal care giant, has decided to exit several product categories in Central and Western Europe.
Nomura, the financial services provider, has similarly earmarked Europe to yield $450m in its targeted $1bn in cost savings.
Figures from Grant Thornton, the consultancy, suggested that global corporations have lost some $2tr due to the financial crisis in Europe since 2009, although not all firms are feeling the squeeze.
"For a Chinese company like us, Europe is still a very attractive place to do business, partly because there is still a lot of demand ... and because the macroeconomic and political environment is fairly stable for us," said Leo Sun, president for Europe at Huawei, the telecoms giant. "It's a top priority."
Data sourced from McKinsey/Financial Times; additional content by Warc staff