From clout to rout

IT FEELS indelicate to raise it at a time like this, but European business has a bigger problem on its plate than Britain’s decision to leave the European Union. After a decade of stagnation the continent’s firms have suffered an alarming decline in their global clout. Europe’s slide down the corporate rankings has been brutal, even before the market rout in the wake of Brexit. Of the 50 most valuable firms in the world, only seven are European, compared with 17 in 2006. No fewer than 31 are American, and eight are Chinese (few other emerging-market firms are really big yet). It’s past time that Europe’s bosses, investors and governments paid attention.

At the turn of the century it seemed natural that European firms would compete head to head with American ones, dividing the world between them, especially given that Japan’s once-aggressive multinationals were in retreat. In the following years Europe’s weight rose, relative to America’s, measured by the profits and value of listed firms. It peaked before the financial crisis (see chart 1).

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via Business Feeds

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