A chart that reads "The vulnerability of industries across Europe to the upcoming shock diverges" for Germany, Spain, France, Italy, Hungary and Poland which shows the highest vulnerabilities in Transport

Surging energy prices prompt European governments to introduce soft energy rationing measures and provide support to households and some businesses

While the contraction in industrial activity is likely to be broad based, some industries will be more resilient to the upcoming shock and see a relatively quicker rebound in late 2023. Light manufacturing industries and service industries should retain their resilience, though they are unlikely to avoid a contraction, as consumer spending across Europe is set to ease substantially. The relatively lower exposure to energy shocks, however, should pave the way for a more resilient rebound and likely offer some new B2B demand opportunities in late 2023.


  • Manufacturing PMI across Europe saw a dramatic drop between July and September, with headline eurozone PMI dropping to 48.4, indicating a more pronounced contraction in activity.
  • Elevated gas prices and surging electricity prices across most of Europe have prompted companies in the chemicals and metallurgy sectors to substantially reduce output.
  • The German energy regulator has issued a warning that gas consumption must fall by 20% during the winter months across all commercial, industrial, and private sectors if emergency rationing is to be avoided.
  • Governments across the region have continued to strengthen existing fiscal support measures and have begun to expand support for businesses in light of the looming recession and energy crunch.
  • FrontierView’s updated industry vulnerability index accounts for total energy usage by industry, turnover and confidence dynamics in 2022, available gas inventories per market, and government prioritization.

Our View

Surging energy prices have prompted governments to introduce soft energy rationing measures and fiscal support for households and certain businesses. The latter, however, remains limited in scope but will likely be expanded as operational challenges continue to mount. Current measures to reduce energy consumption remain focused on reducing public sector consumption and are largely advisory, but a failure to reduce gas consumption by around 15% across Europe in the next couple of months will likely prompt the implementation of tougher restrictions. Businesses have, however, already started to reduce consumption or begun to switch to oil to prevent a sharper drop in output levels. High operational costs and easing domestic and global demand will translate into a contraction in output that will last through most of 2023, but the lower reliance of some industrial sectors on gas and electricity outputs, especially light manufacturing and services, and a higher likelihood of receiving government support will make them relatively more resilient and more likely to see a rebound in late 2023.

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