- EU firms have demonstrated remarkable agility in addressing supply chain disruptions so far.
- Intra-EU trade tends to cushion trading firms from trade disruptions.
- Innovation, digitalisation, better management and productivity are both prompting firms ‘development as well as resilience to trade shocks.
The European Investment Bank (EIB) in collaboration with the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) has published today the report titled "Navigating Supply Chain Disruptions: New Insights on the Resilience and Transformation of EU Firms".
The findings, discussed this morning in a workshop in Brussels, support ongoing policy discussions on strengthening measures to enhance EU supply chains ‘resilience and addressing geopolitical tensions and economic security considerations.
The report outlines pressing challenges faced by EU firms due to global trade disruptions in the post pandemic era, highlighting the need for coordinated EU responses.
Recent crises have exposed vulnerabilities in supply chains and highlighted strategic dependencies. The report shows that 37% of EU firms identified access to raw materials and semiconductors as a major obstacle, while 34% were impacted by disruptions in logistics and transport.
Whilst only 22% of firms that rely solely on imports within the EU reported disruptions related to logistics and transport, the share of firms relying on imports from China and reporting similar disruptions climbed to 44%.
The report also underscores that firms using tailor-made inputs are more subject to disruptions, whereas highly productive businesses are more likely to increase inventory levels and less likely to reduce imports.
At the same time, EU companies involved in global production networks have shown agility and the capacity to transform in response to recent supply chain disruptions. Firms are responding to global trade disruptions by implementing various adjustment strategies. Inventory management is the most common measure adopted, while many firms are diversifying their trade partners to reduce dependency.
To strengthen EU’s competitiveness, it is crucial to equip firms with predictable framework conditions and access to finance to allow them to diversify their trade partners and invest in innovation.
Román Arjona, Chief Economist at the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs of the European Commission, stated, “European companies are putting in place strategies to adapt to ongoing uncertainties. This insightful report finds that the Single Market is essential to build resilient global supply chains and buffer firms from external disruptions.”
Debora Revoltella, Chief Economist at the EIB, stated, “Economic security hinges on the ability of EU firms to navigate disruptions. Our findings emphasize the importance of supporting firms in investing in innovation and digitalisation, while diversifying supply sources. In a rapidly changing global landscape, fostering resilience is not just a necessity but a strategic imperative in enhancing the competitiveness of the EU economy.”
Background information
About the EIB
The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It provides finance and expertise for projects that contribute to EU objectives. The EIB Group works closely with public and private sector partners to support sustainable investment, job creation, economic growth and innovation across Europe.
About the DG-GROW
The Directorate General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) is the Commission department that works to support an open, seamless and resilient Single Market, with open borders and free flow of goods and services. The department supports the competitiveness, growth and resilience of the EU economy, while focusing on strengthening the leadership of European industries across different industrial ecosystems.