Svalberg ERT
Image: Ericsson boss Carl Henric Svanberg
European companies will begin to invest more in the homegrown workforce as the US moves further towards protectionism and the appeal of China wears off according to one of the continent's leading industrialists in an interview with the Financial Times.
The chairman of the European Round Table of Industrialists (ERT) and head of Volvo, Carl-Henric Svanberg, lauded European stakeholder capitalism, saying that despite its heavier taxation and stronger regulations than in China or the US, it was ultimately a more sustainable model.
“I actually think it works better here than it does in the east and west. That doesn’t mean that America, with their way of doing things, haven’t been able to drive growth harder, they have. But I think over time if inequality keeps on growing it will come back and bite them,” said Mr Svanberg in the interview.
Whilst acknowledging the fact that the European Union is currently undergoing a populist resurgence, he said that the bloc would ultimately benefit from more social cohesion down the line.
Mr Svanberg's remarks have come at a time when there is growing debate in Europe and elsewhere about the sustainability of shareholder capitalism and the effect it has on the most vulnerable members of society.
“We believe in capitalism but we have to foster capitalism in a way that actually works for everyone,” he said.
A consortium of 55 chairman and CEOs of multinationals, the ERT is most power lobbying groups in Brussels. The companies that make up the ERT have an estimated combined value of €2.25tn.
Mr Svanberg, who is also the former CEO of Ericsson and ex-chair of BP, said that companies were more willing to invest in domestic markets because “we as companies, even though we are global, will not be successful if the countries we come from are not successful”.
“We are going to invest more in Europe in jobs and innovation than we have done for many years. We have gone through a 25-year period when China quickly raised its skills and productivity so it was disproportionately advantageous to move activities because they kept salaries down,” he added,
Mr Svanberg also said that shorter supply chains were more preferable to most companies due to being easier to integrate software and hardware.
As the European Union prepares for parliamentary elections in May, the ERT has been outlining its own ideas for the new Commission who will appointed later in the year. It has been urging for a new industrial policy that allows European firms to better compete with the US and China and aid in the global growth of European multinationals.
The ERT chairman was also keen to highlight that while Europe could no longer be "naive" about China, it did not take the same view as Washington.
“China’s growth and existence is not a negative for Europe as a whole,” he said.
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