THE INEVITABLE CHANGE OF PARADIGM
E-Commerce
The turnover of e-commerce in Europe in 2020 exceeded 550 billion euros, representing one fifth of household consumption expenditure. The health crisis has changed consumer behavior. Even after the situation returns to normal, certain habits will persist. The success of online entertainment (video-on-demand) is expected to resist the reopening of cinemas. Similarly, the delivery of groceries should continue and even increase, as should the delivery of meals, which has been very successful.
The supply of digital services can only increase as the market grows. More and more entrepreneurs are specializing in this type of business.
Teleworking
For existing companies, the epidemic is leading to changes in organization and strategies. From 2009 to 2019, the proportion of employees who regularly telework increased from 7.5 to 9%. During the health crisis, this rate went over 20%. If a decline occurred after the crisis, teleworking one to two days a week could eventually become the norm, which will lead companies to review the size of their offices and their structuring.
Robotization
To remain competitive and to capture some of the potential relocation, industrial companies will have to continue to robotize. From 2002 to 2019, the number of robots per 100 industrial jobs increased from 1 to 2.2 in the euro area. This ratio is low compared to Korea (8.5) or Japan (3.6). In the euro zone, Germany stands out from its partners with a ratio of 3.4, compared with 1.7 for France, which ranks last.
Upgrading European industry requires a major effort in investment in information and communication technologies, which amounted to 3% of GDP in 2019. This rate is 2 to 3 percentage points lower than in the United States, Japan, Korea or China.
Sustainable lifestyle
Reducing CO2 emissions by 55% by 2030 and achieving carbon neutrality by 2050 requires an unprecedented investment effort. Since 1990, the Eurozone has managed to reduce its emissions by 25%, taking into account the atypical year 2020 (in 2019, the reduction was only 18%).
If our current way of life was proven to unsustainable for our planet, this pandemic has taught us that we can easily change that. We all had to experiment digital solutions, be it virtual meetings for work, digital education for students and virtual events instead of in person conferences. These proved not only to be effective but also an environmentally-friendly way to operate in a connected world. People also learned to live with the bare essentials during the lockdown, as closed shopping centers highlighted the futility of some of our mindless consumerism.
In the future, more environment-friendly ways to operate will undoubtedly emerge. The people are also more likely to give priority to a simple yet rewarding lifestyle, reducing consumption, increasing savings as precautions against future income uncertainties. The protection of the earth and the next generation is going to drive a majority of life-choices.
European dependencies and Risks of depletion
Imports from countries outside the euro area have already risen sharply over the last twenty years, from 16% to 27% of GDP, due in particular to the growing importance of trade with South East Asia. The euro area is largely absent from the production of electronic products and services (computers, semiconductors, Internet platforms). Among the world’s top seven computer producers, Europe has no representative. The United States has three companies, Taiwan two, and China one, as does South Korea.
Europe is also 95% dependent on the US, Korea, Japan, China and Taiwan for the production of microprocessors. The market capitalization of European technology stocks is twenty times lower than that of the United States. For renewable energies, Europe is dependent on the United States or South East Asia for solar equipment. For wind energy, the situation is a little more balanced thanks to Danish and German companies.
Europe is also lagging behind in terms of batteries. Its production capacity amounts to around 10 Gigawatts (of which almost half comes from Poland), while China’s production capacity exceeds 217 Gigawatts and that of the United States 50 Gigawatts.
The euro zone therefore faces a real risk of impoverishment if European companies do not succeed to rapidly develop renewable energies and information technology sectors. Unless it can compete with China, the United States or Korea, the euro zone will become increasingly dependent on domestic services with low added value. The high dependence of southern European countries on tourism has also shown its limits with the health crisis.
CONCLUSION
As people work together in breaking the chain of coronavirus infection, a new world is emerging. The tough times are sure to pass, leaving behind the wisdom of practicing compassion and caring for what genuinely matters in life, like the welfare of family members. But people have realized the need for precautions and are taking steps against future contingencies, to keep the coming generations safe.
Europe’s economic environment will also need to build stronger risks analysis and mitigation plans, including alleviating its current dependence in essential goods.
– In the future, more environment-friendly ways to operate will undoubtedly emerge. The people are also more likely to give priority to a simple yet rewarding lifestyle –