Navigating Shocks: The Performance of the EU Corporate Sector from the Pandemic to the Energy Crisis

This paper analyses the evolution of the profitability of non-financial corporations in the EU after the pandemic and the energy price shock, based on industry- and firm-level data.

Highlights:

• Analysis of profitability of non-financial corporations (NFCs) in the EU in the aftermath of the pandemic and energy price shocks.
• Based on industry-level and firm-level data.
• The energy cost shock has been associated with a deterioration in cost competitiveness of European manufacturing firms in the global market.
• The paper documents a positive relationship between production costs and energy intensity, only partly compensated by stronger producer price growth in such industries.
• Simulation results suggest that 20% of EU NFCs had negative cumulative operating profits over 2022-23. 
• Profitability growth was pushed into negative territory by the energy cost shock for the relatively energy intensive firms. 

Information and identifiers

Discussion Paper 216. December 2024. Brussels. PDF. 30pp. Tab. Graph. Bibliogr. Free.

KC-01-24-007-EN N (online)
ISBN 978-92-68-23201-9 (online) 
ISSN 2443-8022 (online)
doi:10.2765/1408701 (online)

JEL classification: C23, C67, D22, D24

Disclaimer

European Economy Discussion Papers are written by the staff of the European Commission’s Directorate-General for Economic and Financial Affairs, or by experts working in association with them, to inform discussion on economic policy and to stimulate debate. The views expressed in this document are solely those of the author(s) and do not necessarily represent the official views of the European Commission.