Industry, CsC: Italy among the EU countries most affected by rising energy costs

Italian manufacturing maintains a significant role in the national economy and in the international context. This is what the Rapporto Industria 2025 (Industry 2025 Report) by the Confindustria Research Centre highlights. A document that answers the question: "Manufacturing in transformation: will it still remain competitive?" presented in Rome. We are talking about the eighth largest manufacturing industry in the world, with 2.1% of global manufacturing added value; the second largest in Europe, 13% of European manufacturing added value.

After several years, Confindustria is once again publishing a report dedicated to Italian manufacturing. The initiative responds to the need for an organic and up-to-date picture of the characteristics and evolution of the manufacturing sector, which is confirmed as a pillar of the national economy and an essential component of the country's competitiveness.

The energy shock on business costs was more pronounced in Italy than in France and Germany. Even before the pandemic, the Italian manufacturing industry, along with the German industry, had a slightly higher incidence of energy costs on total production costs than the French industry. As prices escalated, the incidence exploded and Italy was by far the most affected EU country. It is highlighted that, "three years after the shock, the incidence of energy costs on total production costs in Italy remains above the 2018-2019 average by more than one percentage point. For France, on the other hand, the shock is almost completely reabsorbed, while Germany marks a +0.6 p.p.". According to the report, the increase in energy costs was heterogeneous across sectors. In almost all countries, the most affected sectors were the energy intensive ones, starting with metallurgy, and in Italy this sector was the hardest hit. The sectors of ceramics, glass, cement, plaster, bricks and lime (non-metallic minerals, +2.5 p.p. in Italy compared to just over 1 p.p. in Germany) also had a major impact. The increase was marked in the wood and rubber-plastics sectors, with an increase in the incidence of energy costs compared to pre-pandemic of about +1.5 p.p., against less than 0.5 in Germany and France. In the other sectors, with the exception of paper and printing, electronics and furniture and other industries, the increases are smaller and still less than one percentage point, but Italy is still the most affected country in relative terms.

The result that emerges from the report is a comprehensive snapshot of Italian manufacturing. Which, the survey highlights, maintains a relevant role in the international context and for the national economy: it is eighth in the world and second in Europe in terms of size (2.1% of the global manufacturing added value and 13% of the European one) and generates 15% of the Italian GDP - a percentage that doubles when considering allied industries. In addition, it makes 35% of investments in machinery and equipment and 50% of R&D spending, and on average has higher productivity levels than other sectors, enabling it to pay higher wages than services (+20% in 2024), construction (+21.0%), the public sector (+8.3%) and the total economy (+14.5%).

The Italian manufacturing sector has a very high degree of diversification compared to other European manufacturers, which contributes to strengthening its resilience to global shocks. Its sectoral composition has remained relatively stable over the last decade, with specialisation concentrated in medium- and low-technology-intensive sectors, accounting for around 60% of manufacturing value added - a lower share than in Spain (64%) but higher than in France (51%) and Germany (39%). Instrumental mechanics (14% of the manufacturing value added), metal products (13%) and foodstuffs (9%) maintain a significant incidence on national manufacturing; textiles (25% of the European sectoral value added), clothing (47%), leather goods (50%) and furniture (20%), on the other hand, have a particularly high weight in the European context; finally, metallurgy, chemicals and rubber-plastics are the sectors with the greatest upstream and downstream connections along the production chains.