Over the last twenty years we have witnessed some major decisions taken within the European Union. Decisions which, beyond partisan opinions, should be evaluated according to the consequences they produce. Brexit, the Green Deal, the closure of nuclear power plants in Germany and the abandonment of Russian gas, the introduction of sanctions and economic restrictions that have had a boomerang effect on European companies themselves.
All this has turned the European market into an economically unfavourable environment. Last week, a group of 70 businessmen called on the European Commission to lower energy prices and review green policies that are reflected in exorbitant costs. The solution that more and more companies are finding is to move their business to the United States, where they benefit from favourable tax conditions and opportunities for massive capital infusions.
Deloitte research found that 67% of German companies have moved at least part of their business outside Germany because of energy costs. In the automotive, mechanical engineering and industrial goods sectors, the percentage is 69%. At the same time, German companies invested a record $15 billion in their US business in 2023.
European stock markets are facing the same situation. Many companies prefer to delist from European exchanges in order to list on the New York Stock Exchange. Major companies such as Linde, CRH, Smurfit Kappa or ARM Holdings have already done so. The London Stock Exchange is particularly suffering from a massive withdrawal of companies. While in 2015 more than 2400 companies were listed on the London Stock Exchange, by 2023 the number has been reduced to around 1900.
Amid restrictive regulations and a pessimistic outlook shared by many business people, Europe could face a massive migration of companies and capital westwards towards the United States. Just as after the fall of Constantinople in 1453, the exodus of Greeks to Italy led to the beginning of the Renaissance, so a massive movement of brains and capital from Europe to the US could lead to a surprising economic revival of its Atlantic neighbour and a deep and long-lasting recession for European countries.
Dragos Movila, financial analyst
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