Europe must move to deregulate to boost competitiveness in the face of an energy shock caused by the Iran war or risk a crisis of "mass unemployment", the head of one of the bloc's biggest engineering groups has warned.
Morten Wierod, ABB's chief executive, told FT that European lawmakers have shown “no sense of urgency” in pursuing deregulation, even at a time when rising gas prices in Europe are hurting the bloc’s competitiveness compared to the US.
He noted that the reform plan, commissioned by the European Commission and written by former Italian Prime Minister Mario Draghi, was published almost two years ago, but that very little has been done about it.
"I hope it won't be necessary to see a much bigger crisis that would mean mass unemployment. That shouldn't be necessary to create that right sense of urgency," Wierod said in an interview in New York.
“The single market or the EU needs to remove more legislation, and not just simplify it, but eliminate it and promote more of a single market; this will boost economic growth.”
ABB, which is headquartered in Zurich, Switzerland, is one of the largest industrial engineering and technology companies in Europe, with a market capitalization of almost $200 billion. It employs 52,400 people in Europe – almost double the number of staff it employs in the US, which is the group’s highest-paying region.
Wierod said the plan announced by Brussels this week to establish rules that reduce dependence on foreign technology could have "unintended consequences" and increase costs.
We are pro-open trade… we see that when you build this legislation around some of the ‘Made in Europe’ discussions that are going on right now – there are always side effects.”
Wierod is the latest senior business leader to call on Europe to reduce bureaucracy and implement reforms to boost the bloc's competitiveness.
In October, the CEOs of TotalEnergies and Siemens wrote an open letter to French President Emmanuel Macron and German Chancellor Friedrich Merz, calling on EU states to repeal a primary law on corporate sustainability. EU lawmakers agreed on reforms to reduce the law in March.
The Commission has launched a "simplification" initiative to reduce bureaucracy, which it says has already produced €15 billion in annual savings for businesses and national authorities.
But progress on implementing the 2024 Draghi report, which highlighted a widening productivity gap between the US and Europe, has been slow. Only 10 percent of its 383 proposals have been adopted, according to an online tracking system.
Wierod said that Europe has some very strong aspects: its workforce, access to high-quality education and experience in crisis management.
“If you looked at how Europe was able to cope and change its dependence on Russian gas – it happened quickly, from 35 percent to 10 percent within a year. So crisis management exists.”
But he said competitive pressures are increasing in Europe due to gas price inflation, caused by the disruption of supplies from the Middle East since the war in Iran.
“I’m not worried that Europe won’t have gas. It will. But it will come at a higher price, and that’s what we saw in 2022 – and we know that these [higher] gas prices will remain for 2026 and 2027,” Wierod said.
“So this, of course, will again have more of an impact on European competitiveness than on that of the United States, because you have your own gas.”
Up to 1.3 million jobs in the EU could be lost as a result of higher prices, Roxana Mînzatu, the European Commissioner for Jobs, said on Wednesday.
ABB is lobbying EU decision-makers to accelerate electrification, industrial efficiency and decarbonization, saying this is the fastest way to make the bloc more competitive.
