TIPPING POINT: THREATS TO JOBS AND GROWTH IN EUROPE’S CHEMICAL SECTOROCTOBER 2025A REPORT FOR INEOS BY OXFORD ECONOMICS• Between 2019 and 2025Q2, the European chemical sector’s output declined significantly. It has contracted by 30% in the UK, 18% in Germany, 12% in France, and 7% in Belgium. Output levels have been hit by reduced price competitiveness due to higher gas and electricity prices than elsewhere, higher environmental and other regulatory costs, and excess global capacity, largely driven by China.• The decline in output levels has led to many firms to close plants which has led to job losses. Annual accounting data show that between 2019 and 2024, household names like BASF, have cut their European employment by 8% meaning a loss of more than 5,000 jobs while Borealis have cut their European employment by 15% with a further loss of one thousand jobs.1,2 The polymer segment of the chemical industry is under particular threat with 40% of EU ethylene capacity facing the threat of closure. Closures are causing thousands of job losses and will lead to substantial knock-on impacts for the wider chemicals industry. Once closed, sites will not reopen due to the high capital costs required. • Structural pressures—chiefly high energy and carbon costs alongside regulatory and permitting burdens—are undermining the sector’s viability. Falling output levels and lower profitability is As the continent’s fourth largest industrial sector, the chemical sector is an integral part of the European economy. Prior to the Covid-19 pandemic in 2019, the sector contributed €165 billion of gross value added to the economy and employed 1.2 million people in Europe (i.e. EU27+UK). Over half of European employment in the sector is situated in Germany (396,000), France (212,000), and the UK (105,000).3 causing European chemical firms to cut their investment relative to their global competitors. Between 2019 and 2024, the average annual growth in European chemical firms’ investment spending was half the rate of their US counterparts (1.5% versus 3.0%). This trend is projected to continue over the next decade. This will further adversely impact the sector’s competitiveness.• The chemical sector is heavily interwoven with the European economy and directly employs 1.2 million people. For every job in the sector, it supports between 3.0 to 4.6 jobs elsewhere in Europe along its supply chain and through staff spending their wages in the consumer economy.• Emissions data from Oxford Economics suggest that, if European chemicals production is replaced by imports from China and the US, total carbon emissions will rise. Chinese and US chemical industries emit around threefold and twofold more carbon for the same volume of output, respectively, than those in Europe. The greater distances needed to transport the imports will also add to the greenh...
