|Europe is falling dangerously far behind the US in productivity growth and is blighted by crippling energy costs, the pan-EU industry federation has warned.
“Europe doesn’t have an energy policy. It has a climate policy,” said Markus Beyrer, head of BusinessEurope.
Mr Beyrer said the US is running away with the shale energy revolution, leaving Europe’s companies in the dust. Spot gas prices are now four to five times higher in Europe, with grim implications for the chemical industry.
“Shale gas is a game-changer and we need to have a discussion based on the evidence, not based on risks,” Mr Beyrer told The Daily Telegraph. France has imposed a moratorium on shale exploration and few countries have yet to take decisive action.
Mr Beyrer said Europe’s carbon trading scheme is a muddle with “mutually distorting objectives” that drive up energy costs without much benefit for the climate. The latest twist is a switch to coal by EU power companies, playing havoc with CO2 goals.
“Nobody is happy. The US and even China are making more progress with renewable targets than we are,” he said.
Equally worrying, he said, is that Europe is slipping further behind in industrial efficiency, chiefly due to rigid labour markets. “Labour productivity in US manufacturing has increased by 1.8pc since the early 2000s, compared with 0.66pc in the Euro Area,” he added.
The transatlantic gap in economic growth reached 2.6pc last year after the eurozone crashed back into recession, the highest since 1993. Citigroup expects the gap to widen further to 3.4pc by 2014 as EMU remains stuck in slump, with extreme levels continuing into the latter part of the decade.
This will have profound compound effects. Euroland’s overall GDP will slip from 78pc of US levels to 66pc by 2025. “We expect very different recovery paths, reflecting differing policy choices,” said the bank.
America’s per capita income will be 9-10pc higher than the 2007 level by 2017; the eurozone’s will be 3-4pc lower, worse than Japan’s Lost Decade.
The problems facing the eurozone were underlined on Tuesday with figures showing that German exports fell in February. Exports fell by 1.5pc compared with January of this year and by 2.8 pc from February 2012, official figures said.
In France, the second biggest eurozone economy, the trade deficit widened as a drop in exports was not made up for by a bigger drop in imports.