The Brexit vote shook up the European Union and is causing many companies to rethink their European strategies. While the European Union and the Euro Zone create many common features across much of Europe, cultural and market distinctions are still very common across the continent and need to be taken into consideration by proactive exporters. Even with many uncertainties, market prospects are brightening for Europe. For the first time in almost a decade, the European Commission expects the economies of all EU member states to grow between 2016 and 2018.
View Detailed Country Information: UNITED KINGDOM, BENELUX, GERMANY, FRANCE
The United Kingdom is one of the largest economies in the world. It is often one of the first destinations for Wisconsin exporters expanding beyond North America, partly due to language but also because of its effective rule of law, open trading environment, and well-developed financial sector. The UK labor market is relatively liberal by European standards. The 51.9 percent vote in favor of the UK’s leaving the European Union came as a surprise to many in June 2016. While never part of the Euro Zone, the 40+ years that the UK spent as part of the common market will make for long and involved negotiations for either a “hard” or “soft” Brexit. The many uncertainties that this creates will require Wisconsin exporters to pay close attention to developments and adjust their strategies accordingly.
While each of the Benelux countries (Belgium, the Netherlands and Luxembourg) has its own strong national and cultural identity, a distinct language and its own economic strengths, there are also very close ties among the three countries, and many U.S. companies employ a regional approach when doing business with them. The location and logistics infrastructure in the Netherlands and Belgium make them ideal locations for broader European distribution facilities. Luxembourg has long been a world center for banking, finance and insurance. The Benelux countries all have favorable tax climates, well-educated and English-speaking workforces, and a favorable Ease of Doing Business Ranking from the World Bank.
Germany is home to both great customers of Wisconsin exporters and some of their toughest competition. As Europe’s largest economy and second-most-populous nation, Germany is a major driver of the regional economy. Manufacturing’s share of GDP is greater in Germany than in most other developed countries, and German exports have been extremely strong. In 2016, the country’s GDP expanded at the fastest pace in five years, and the unemployment rate was at a 26-year low of 5.8 percent in March 2017. Demographic challenges including low fertility rates and a growing immigrant population are putting pressure on the country’s social welfare system, making structural reforms necessary.
France is one of the most highly developed countries in the world and is a leader among European nations. The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault and Thales. However, the government maintains a strong presence in some sectors, particularly the power, public transportation and defense industries. The election of Emmanuel Macron as president in May 2017 dispelled some concerns about the country’s economic trajectory, and the economy is expected to accelerate in light of a recovery in exports and solid domestic demand. France continues to be a top destination for international tourists.
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